Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

Oral Answers to Questions — SPAIN.

Mr. Denville: asked the Secretary of State for Foreign Affairs whether he is now in a position to inform the House regarding the activities of Mr. Cockburn, a British subject who is acting as assistant publicity agent for the Madrid Government?

The Secretary of State for Foreign Affairs (Mr.Eden): I am informed that Mr. Cockburn is reported to have been recently at Valencia and Almeria. So far as I can ascertain, he has been engaged in Press and propaganda work on behalf of the Spanish Government.

Mr. Denville: Is it not a fact that Mr. Cockburn, in co-operation with a man called Greenspan, a Communist leader, is running the whole of the Madrid publicity which comes into this country?

Mr. Gallacher: Is the hon. Gentleman aware that, as was stated before, Mr. Cockburn is a good correspondent of a good paper, and is a better publicity agent than the Marquis del Moral?

Mr. Day: asked the Secretary of State for Foreign Affairs whether he will give particulars and state what progress has been made for the release of British prisoners in the hands of either General Franco or the Government forces in Spain?

Mr. Sorensen: asked the Secretary of State for Foreign Affairs whether he will ascertain the number of British subjects now held as prisoners of war in Spain by the insurgent and Government forces, respectively?

Mr. Eden: Twenty-three British prisoners were released by the insurgent authorities on 29th May. I understand

that there are five British prisoners remaining in insurgent hands, and I have received unconfirmed reports of two or three further cases. Appropriate instructions have been sent to His Majesty's Ambassador at Hendaye in respect of all these cases. The Spanish Government have stated that, to the best of their knowledge, they hold no British prisoners.

Mr. Day: In view of statements made by released British prisoners, will the right hon. Gentleman consider approaching General Franco to see that more humanitarian measures are taken in the future?

Mr. Sorensen: Is the right lion. Gentleman aware that he did not answer my question? Will he, therefore, take steps to ascertain how many British subjects are prisoners on either side?

Mr. Eden: I have answered the question and given the information sought. I have said that 23 had been released on one side and that, perhaps, eight remained, while on the other side, as far as I know, there are none.

Mr. Macquisten: What are they doing there, anyhow? It is not their quarrel?

Mr. Noel-Baker: Why is General Franco discriminating between some of these prisoners and others?

Mr. Eden: I cannot say. All I know is that 23 have been released, and naturally we hope the others will be released also. In fact, I think more British prisoners, in proportion, have been released than prisoners of other nationalities.

Mr. Arthur Henderson: May we take it that those who remain in the hands of General Franco, are not being kept as hostages?

Mr. Eden: Not as far as I know.

Mr. A. Henderson: asked the Secretary of State for Foreign Affairs whether any agreement between His Majesty's Government and the French, German, and Italian Governments as to the form and nature of the naval control to operate off the coast of Spain for the purposes of the Non-Intervention Agreement will be submitted to the Non-Intervention Committee for their approval before such agreement becomes operative?

Mr. Eden: The exchanges of views which are at present taking place, with the full knowledge and approval of the Non-Intervention Committee, between His Majesty's Government and the three Governments referred to are concerned with the guarantees which might be obtained from the two parties in the Spanish conflict in order to enable the work of naval patrol which has been delegated to these four Governments to be restored to full operation, thus permitting the Committee to resume its work. Should any proposals be made in the course of this exchange of views which would involve modification of the scheme of observation itself they would, so far as His Majesty's Government are concerned, be a matter for consideration by the Committee.

Mr. Henderson: When does the right hon. Gentleman expect to be in a position to make a statement on these negotiations?

Mr. Eden: I could not say.

Mr. T. Williams: Will any proposals made by Italy, Germany or France to the contending parties in Spain, be submitted first to the Non-Intervention Committee?

Mr. Eden: I think the hon. Gentleman will find that my answer covers that point. It depends, of course, on the nature of the proposals.

Miss Rathbone: Will Parliament also be given an opportunity of expressing its opinion of the proposals and of satisfying itself that precautions are being taken against a repetition of abuses of their position by German and Italian war vessels?

Mr. Wedgwood Benn: Will the right hon. Gentleman give a definite pledge to the House, that in no circumstances will the British Government consent in any form to the right of private retaliation by any of the parties concerned?

Mr. Eden: We accept, of course, and have always accepted, the right of self-defence. We have never subscribed to the right of retaliation.

Miss Rathbone: Will the right hon. Gentleman reply to my question?

Sir Nicholas Grattan-Doyle: asked the Secretary of State for Foreign Affairs

whether his attention has been called to the recent visit of the Dean of Canterbury and other Church dignitaries to Spain; whether he was consulted prior to the visit being undertaken; whether any report was submitted to him in regard to it; whether His Majesty's Government contributed any portion of the expenses relating thereto; and whether, in view of the public statement made jointly by the three distinguished Church members of the delegation that their expenses were paid, he can give any indication of the source from which funds were obtained and whether they were provided by the Spanish Government?

Mr. Eden: My information is that this visit took place as the result of an invitation from the Spanish Government. The members of the party did not consult His Majesty's Government as to the desirability or otherwise of this invitation being accepted. They submitted no report to me. I have no information as to the source from which funds for the visit were obtained, but no portion of the expenses was contributed by His Majesty's Government.

Sir N. Grattan-Doyle: Is the right hon. Gentleman aware that the statements contained in that report have since been proved to be without foundation—

Mr. Speaker: The hon. Member seems to be giving information.

Sir N. Grattan-Doyle: May I finish my question?

Mr. Speaker: Not if it is a continuation of the information.

Sir N. Grattan-Doyle: It is not. Is the right hon. Gentleman also aware that these statements have been repudiated by the Bishop of Gibraltar on behalf of the Anglican Church?

Sir William Davison: Is my right hon. Friend aware that the Dean proposes to repeat these statements at a mass meeting in Strasbourg?

Sir N. Grattan-Doyle: I beg to give notice that on account of the unsatisfactory nature of the reply, I will raise this question on the Adjournment on the first available opportunity.

Mr. Mander: asked the Secretary of State for Foreign Affairs whether he will


give an assurance that any action agreed upon between Great Britain, France, Germany, and Italy with regard to consultations and joint action in the event of further incidents off the coasts of Spain will be in accordance with the terms of the Kellogg Pact that the settlement or solution of disputes shall never be sought except by pacific means?

Mr. Eden: His Majesty's Government will certainly continue to bear in mind that the terms of the Pact of Paris are binding upon the four Governments referred to no less than upon the Spanish Government.

Mr. Mander: Has any guarantee been asked of the German Government against any further invasion of Spain?

Mr. Noel-Baker: asked the Secretary of State for Foreign Affairs whether he can make a statement concerning the progress of negotiations for the withdrawal of foreign troops from Spain?

Mr. Eden: I have nothing at present to add to the answer which I gave to the hon. Member on Wednesday last.

Mr. Noel-Baker: If we understand that there is a scheme which is actually in existence, could the right hon. Gentleman tell us from what Powers opposition to its immediate application has come?

Mr. Eden: From no Power. There is no opposition to its immediate application, but the hon. Gentleman will be aware of the difficulties which we are considering in connection with another matter.

Mr. Mander: Can the right hon. Gentleman say anything about the statement that 300 Germans have recently returned from Spain to Germany?

Mr. Eden: I have seen that statement, and I believe it to be accurate.

Mr. Macquisten: Is not the return of 23 British prisoners a partial repatriation of foreign troops from Spain?

Mr. Noel-Baker: asked the Secretary of State for Foreign Affairs whether he can give the House any information concerning recent despatches of Italian troops from Italy to Spain?

Mr. Eden: No reports have been received by the Non-Intervention Board

regarding arrivals of Italian combatants in Spain since the system of observation of the Spanish frontiers came into force.

Miss Wilkinson: Do we understand therefore that the gentlemen who have arrived in Spain have added to the already large numbers in Spain?

Mr. Noel-Baker: Will the right hon. Gentleman instruct his consular representatives to make the most careful reports on this matter?

Mr. Eden: We have got a patrol at work, most of which is being done in that area by His Majesty's ships.

Mr. Denville: Is it considered fair that the right hon. Gentleman should be asked to give information to the Spanish Government on the movement of Franco's troops?

Mr. Bellenger: asked the First Lord of the Admiralty whether an estimate of the cost of the damage to His Majesty's Ship "Hunter" has been prepared; and whether any pensions will be paid to the dependants of those who lost their lives in this tragedy?

The First Lord of the Admiralty (Mr. Duff Cooper): As regards the first part of the question, I would refer the hon. Member to the answer given yesterday by my hon. and gallant Friend the Civil Lord to the hon. Member for Derby (Mr. Noel-Baker). In answer to the second part of the question, deaths resulting from this occurrence are accepted as attributable to the Service, and pensions will accordingly be paid to all dependants who are entitled to receive them.

Mr. Bellenger: Will the whole of the pension cost fall on the British taxpayer, or will any claim be made in another quarter?

Mr. Cooper: The hon. Member was informed yesterday that the question of claims on another quarter has not yet been taken up. We made a protest, and we await a reply to that protest. In the natural course of events, of course, all pensions for dependants will fall on the Exchequer.

Mr. Bellenger: In view of that last statement, can the right hon. Gentleman say whether the question of making a claim elsewhere is under consideration by His Majesty's Government?

Mr. Cooper: It certainly will be considered in due course, but it is not under consideration at the present time. The matter has not yet reached that stage.

Miss Wilkinson: Has the right hon. Gentleman not yet made any payment to the men who lost their baggage and other necessities in the explosion? I have received word from them that they have received no compensation whatsoever.

Mr. Cooper: That hardly arises out of this question, but I will look into the matter.

Oral Answers to Questions — GERMANY (BRITISH AMBASSADOR'S SPEECH).

Mr. Vyvyan Adams: asked the Secretary of State for Foreign Affairs whether he has read a speech delivered on 1st June by the British Ambassador in Berlin at the Deutsch-Englische Gesellschaft, in which Sir Nevile Henderson commented upon opinion prevalent in Great Britain about the Nazi dictatorship and added that the English might learn therefrom some useful lessons; and whether he has any statement to make upon this speech?

Mr. Eden: I would refer the hon. Member to the reply which I gave to the hon. Member for Kingswinford (Mr. A. Henderson) on Monday last, to which I have nothing to add.

Mr. Adams: While I appreciate the reference of my right hon. Friend, may I ask him to remind his Excellency that this old democracy has nothing to learn from any foreign dictatorship?

Major-General Sir Alfred Knox: Will the right hon. Gentleman convey his congratulations to His Majesty's Ambassador in Berlin on having made a real contribution to the cause of peace?

Mr. Macquisten: Is it not the case that —[Interruption.]

Sir W. Davison: On a point of Order. May I ask, Sir, whether your attention has been drawn to the fact that time after time when the Opposition do not desire a question to be asked or answered, they make an uproar in the House?

Mr. Macquisten: Is it not the case that what the Ambassador meant when he said that we could learn a useful lesson from Germany was not what has been

attributed to him by hon. Members opposite—[Interruption.]

Mr. Speaker: I hope hon. Members will allow questions to be put without interruption.

Oral Answers to Questions — LEAGUE OF NATIONS.

NEW ZEALAND DELEGATE'S SPEECH.

Mr. V. Adams: asked the Secretary of State for Foreign Affairs whether, and, if so, what, influence was brought by His Majesty's Government to bear on the delegate from New Zealand immediately before the delivery of his speech at the Council of the League?

Mr. Eden: My attention has been drawn to certain Press reports on this matter. I am glad to have this opportunity of stating that these reports are entirely without foundation.

Mr. Mander: Are we to understand from that reply that the New Zealand Government is in the fullest accord with the views expressed by the British Government at the recent Council meeting in Geneva?

Mr. Eden: Any one of His Majesty's Governments is entitled to state its own point of view. All I say is that Press reports to the effect that I blue-pencilled this speech are entirely inaccurate. I understand that the representative of the Council of His Majesty's Government in New Zealand has already denied those reports.

Miss Wilkinson: Those are reports that the right hon. Gentleman censored the speech, but is it a fact that the right hon. Gentleman made no representations to the representative of the New Zealand Government which caused him to modify the speech he had originally decided to make?

Mr. Eden: I think my answer is clear.

Mr. Dalton: Does not the right hon. Gentleman welcome the whole-hearted support of His Majesty's Government in New Zealand?

Mr. Eden: We welcome the co-operation of His Majesty's Governments in all Dominions.

DISARMAMENT.

Mr. Mander: asked the Secretary of State for Foreign Affairs what decisions were arrived at at the recent meeting of the Bureau of the Disarmament Confer-


ence and the Committee for the Reform of the League of Nations?

Mr. Eden: At its recent meeting the Bureau of the Disarmament Conference decided in the first place to communicate the text of the draft Convention on Publicity for National Defence Expenditure and the Working of an Organ of Supervision and Co-ordination to all the Governments which are or have been represented at the Conference, with the request that they inform the Secretariat of the Conference whether they are prepared, in principle, to accept a system of publicity based on that Convention. In the second place, the Bureau decided to meet again on a date to be fixed by the Council of the League of Nations, for the purpose of considering the replies from the Governments, discussing the draft Convention on Publicity for National Defence Expenditure, and deciding upon appropriate measures. Finally the Bureau instructed the Secretariat of the League of Nations to collect and communicate to the members of the Bureau any useful information obtainable as to the present position in regard to the national control of the manufacture of and trade in arms in the principal countries. No meeting of the Committee on the Application of the Principles of the Covenant has recently been held, but the Rapporteurs to that Committee met at Geneva on 31st May. They settled the procedure for the completion and publication of their respective reports, and proposed that a meeting of the full committee should be held before the opening of the next ordinary session of the Assembly.

Mr. Mander: Has any date been fixed by which replies are to be sent in?

Mr. Eden: I could not say without notice.

Mr. Leach: Is the right hon. Gentleman of the opinion that the Disarmament Conference is still alive?

Mr. Eden: This is a question of publicity for budgetary expenditure on armaments, and it seems to me to be a good thing to try to get—if we can.

Oral Answers to Questions — ITALY (NEWSPAPER CORRESPONDENTS).

Mr. Hall-Caine: asked the Secretary of State for Foreign Affairs what communications have taken place with the

Government of Italy with regard to the recent withdrawal of Italian newspaper correspondents from London and the banning of the great majority of English newspapers from Italy; and whether this action has had any effect upon the recent Anglo-Italian Agreement?

Mr. Eden: The action taken by the Italian Government has been the subject of discussion between His Majesty's Ambassador at Rome and the Italian Minister for Foreign Affairs on two occasions. With regard to the second part of the question, the joint declaration of January last still represents, so far as His Majesty's Government are concerned, the policy they would wish to see followed in the Mediterranean area.

Oral Answers to Questions — BRITISH AMBASSADORS (SPEECHES).

Mr. A. Henderson: asked the Secretary of State for Foreign Affairs whether any instructions are given to His Majesty's Ambassadors as to their conduct at public dinners and other social occasions; and, if so, whether such instructions in any way differ from those appertaining to their official activities?

Mr. Eden: The answer to the first part of the question is, No, Sir. The second part does not, therefore, arise.

Mr. Henderson: Is it not a fact that in the view of the Foreign Minister himself an Ambassador is always on duty, and if that be so, is it not undesirable for any Ambassador to make statements on social occasions which are inconsistent with the views of His Majesty's Government?

Mr. Eden: I suppose we are always all on duty, but there may be occasions when more licence is allowed to us than on others.

Oral Answers to Questions — ROYAL NAVY.

ROYAL MARINES (TUBERCULOSIS).

Mr. R. J. Taylor: asked the First Lord of the Admiralty the number of Royal Marines invalided out of the Service owing to tuberculosis; the number who have applied for pension; and the number of cases in which pensions were awarded during the last three years?

Mr. Cooper: During the period of three years ended 3oth April, 1937, 65 Royal


Marines were invalided out of the Service on account of tuberculosis, of which number 62 were pulmonary and three other forms; each invalid was automatically considered for an award of pension which was granted in 43 cases.

Mr. Taylor: Can the right hon. Gentleman give the period that these Marines have been in the Service?

Mr. Cooper: I could not give the period of service for each Marine without notice.

Mr. Taylor: Would the right hon. Gentleman consider that three and a-half years' service, with a clean bill of health preceding that, should entitle a Marine to a pension?

CONTRACTS.

Mr. David Adams: asked the First Lord of the Admiralty whether the Ever Ready Company, Carysfort Road, Stoke Newington, do contract work for his Department; if so, what are the articles supplied; and whether the firm is bound by the Fair Wages Clause in Government contracts?

Mr. Cooper: This firm receives invitations to tender for various items of electrical equipment, and has a small contract at the present time. This contract, in common with all Government contracts, requires observance of the Fair Wages Clause.

OFFICERS' MARRIAGE ALLOWANCE.

Mr. Hall-Caine: asked the First Lord of the Admiralty whether the inquiry into the advisability of according naval officers the same privileges with regard to marriage allowance as Army and Air Force officers is yet complete; and whether he expects to be able to make an announcement in regard to this subject before the Summer Recess?

Lieut.-Commander Tufnell: asked the First Lord of the Admiralty what progress has been made in connection with the inquiry into the advisability of giving marriage allowances to naval officers, from whom evidence has been heard; whether it is proposed to make a public report on the subject; and whether he anticipates that it will be possible to announce a decision during the current month?

Mr. Cooper: Representative officers in the Fleet of all ranks have been consulted through the Commanders-in-Chief on all stations; definite proposals have been formulated and are now under active consideration, but I am afraid that I am not in a position to say when a decision will be reached.

Mr. Hall-Caine: Does my right hon. Friend hope to make known the decision on this subject before the Summer Recess?

Mr. Cooper: I am afraid I cannot make a promise, but I certainly hope a decision will be reached in good time.

Mr. George Griffiths: Will the right hon. Gentleman read the speech of the Minister of Health yesterday re population?

Mr. Macquisten: Are not naval officers medically examined, and are they not the best possible stock to breed from?

"DIDO" CLASS CRUISERS.

Lieut.-Commander Fletcher: asked the First Lord of the Admiralty, what duties it is proposed to assign to the "Dido3" class cruisers?

Mr. Cooper: The "Dido" class are intended to serve as small fleet cruisers.

Lieut.-Commander Fletcher: Will there not be great difficulty in assigning duties for these cruisers, in view of the fact that they will be inferior in both speed and armament to the ships of a similar type that are being built for foreign Powers?

Mr. Cooper: As my noble Friend the late Parliamentary Secretary informed the hon. and gallant Member not long ago, it is considered that these cruisers are perfectly well fitted for the duties which they are designed to carry out.

Mr. A. V. Alexander: Are they to be specially fitted with the new antiaircraft guns? Are they to be used specially for anti-aircraft defence of the Fleet?

Mr. Cooper: They are to he used for anti-aircraft defence of the Fleet amongst other purposes. As to any other detail, I shall be glad to inform the right hon. Gentleman if he will put down a question.

Lieut.-Commander Fletcher: Is the right hon. Gentleman aware that the former Parliamentary Secretary to the Admiralty gave no information at all as to what these cruisers were to be called upon to perform?

BOYS (MILK).

Mr. Graham White: asked the First Lord of the Admiralty the present amount of the milk ration for boys in the Navy?

Mr. Cooper: There is no fixed ration of milk for boys in the Navy as they are victualled under the general mess system and are provided with a varied dietary without fixed rations of the various items of foodstuffs. The average amount of milk issued daily to each boy is estimated to be approximately half-pint.

Colonel Gretton: Will my right hon. Friend say whether the milk is fresh or tinned?

CEYLON (MR. M. A. BRACEGIRDLE).

Mr. Sorensen: asked the Secretary of State for the Colonies whether he has taken any action respecting the action of the Governor of Ceylon in making an illegal order for the deportation of Mr. Mark Anthony Bracegirdle.

The Secretary of State for the Colonies (Mr. Ormsby-Gore): I am still in cornmunication with the Governor concerning this matter.

Mr. Sorensen: Will the right hon. Gentleman tell the House as soon as he has any information about this extraordinary action on the part of the Governor?

Mr. Ormsby-Gore: I want to see the full proceedings that took place in the court first. It may take some time.

GOLD COAST (FORGED LETTERS).

Mr. Sorensen: asked the Secretary of State for the Colonies why the alleged forger of letters purporting to have been sent by Sir Ofori Atta, in the Gold Coast, has not yet been arrested?

Mr. Ormsby-Gore: The latest report which has reached me on the local police investigations was placed in the Library of the House in February. Up to the time of that report, which was forwarded

to me in January, the forger had not been identified. I have no later information.

Mr. Sorensen: Do I understand that, in fact, the statement in one of the local papers in the Gold Coast to the effect that the identity of the forger was known to the police was incorrect?

Mr. Ormsby-Gore: I really do not know. I have said that I have no further official information since the question was put some time ago, but I will make inquiries.

Mr. Sorensen: Do I understand that the right hon. Gentleman will make inquiries of the Governor of the Gold Coast?

Mr. Ormsby-Gore: Certainly.

IMPERIAL DEFENCE.

Mr. Hall-Caine: asked the Secretary of State for the Colonies what arrangements will be made for the representation of the Colonies on the Empire Defence Co-ordination Committee to he set up as a result of the Imperial Conference?

Mr. Ormsby-Gore: There has been no proposal to set up a new Empire coordination committee as a result of the Imperial Conference. The Committee of Imperial Defence organisation is already available, and is extensively used, for coordination of Empire defence problems of every kind. A special sub-committee known as the Oversea Defence Committee is continuously and mainly engaged on problems of colonial defence.

TANGANYIKA (LAND DEVELOPMENT).

Mr. Paling: asked the Secretary of State for the Colonies the number of acres of land involved in the Chesham concession in Tanganyika; whether it was put up for auction to the highest bidder; and what is the rent per acre?

Mr. Ormsby-Gore: Tanganyika (Southern Highlands) Estates, Limited, were granted a right of occupancy with effect from 1st January, 1937, for a period of 10 years over an area of approximately 110,500 acres at a rent of one cent per acre. This grant was conditional on the acceptance by the company of a certificate of occupancy for 99 years with


effect from the same date in respect of part of the above area amounting to approximately 19,500 acres, under which certificate a rent of 10 cents an acre (revisable every 20 years) is payable. In addition, the company is under an obligation, with effect from 1st January, 1939, to bring under intensive development each year at least 6,000 acres out of the main area, and to accept certificates of occupancy in respect of such areas involving the payment of a rent of 10 cents an acre (revisable every 20 years). The grant of these rights of occupancy was not made subject to auction, having regard to the terms of Section 3 of Ordinance No. 5 of 1935, which empowers the Governor to grant a right of occupancy without auction in any special case (outside a township) in which he considers it desirable to do so.

Mr. Paling: Does not the amount of land as now stated by the Colonial Secretary differ from the amount he gave in his speech last week? Is there any special reason why the right of selling by public auction in the ordinary way should have been departed from in this case; and how does the rent compare with the rent paid for other land?

Mr. Ormsby-Gore: I gave 16 square miles as the all-over area which they might eventually take up, but the immediately operative lease involves 19,500 acres according to later information I have. The reason why this was made a special case is that this land is very remote and there is practically nobody there. It is desirable in the interests of the whole country that it should be-developed, and it was considered that this was a very good way of doing it.

Mr. Paling: Are there not plenty of takers for this land if it is made known that the Government want to develop it? Could it not have been done without this double exploitation?

Mr. Ormsby-Gore: I deny that there is any exploitation. I call it development—proper development. There are no other claimants to this land. We have been waiting a long time trying to get some more active development of south-west Tanganyika, and I think it is purely doctrinaire to object to making use of powers to try to get something done.

Mr. Paling: asked the Secretary of State for the Colonies whether the land

granted to the Chesham Development Company is to be let to Europeans only, or can British-Indians or natives take it up?

Mr. Ormsby-Gore: The choice of sublessees will be a matter for the company, but there is nothing in the title deeds granted by the Government prescribing that non-Europeans may not lease land from the company.

Mr. Palin): That depends entirely on the company?

Mr. Ormsby-Gore: Entirely.

PALESTINE (JEWISH IMMIGRATION).

Mr. Mander: asked the Secretary of State for the Colonies whether the Jewish agency has accepted or refused the present labour schedule, allotting only 220 certificates out of the 11,250 applied for to meet the general demand of the Jewish labour market; and what action it is proposed to take?

Mr. Ormsby-Gore: A statement has been issued by the Jewish Agency from which it is inferred that while accepting the 400 certificates earmarked for German Jews whose settlement is to be assisted with funds provided by the Central Council for German Jewry, they have decided not to accept the balance of 220 certificates included in the schedule. I am not aware that this decision calls for any action on the part of the Government.

Mr. Mander: In view of the fact that this schedule has been rejected by the Jewish Agency as a travesty of the Mandate, cannot the Colonial Secretary say what action he proposes to take in regard to Jewish immigration into Palestine in view of the fact that the Agency is not prepared to accept them?

Mr. Ormsby-Gore: The hon. Member knows that the Jewish Agency can forward complaints against His Majesty's Government by petition to the Permanent Mandates Commission. On the general question it is obvious, as I have made clear on more than one occasion, that the Government cannot depart from the strict letter of the MacDonald letter to Dr. Weizmann until they have received the report of the Royal Commission.

Mr. Mander: Are these 220 emigrants going in or not?

Mr. Ormsby-Gore: Yes, I presume that the Government organisation in Palestine will distribute them, and that the Jewish Agency will not.

Mr. Crossley: Does that mean that these 220 certificated emigrants will not go? May I also ask why the right hon. Gentleman should be menaced by the Jewish Agency?

Mr. Ormsby-Gore: I am not in the least menaced by the Jewish Agency. If they do not want these 220 certificates issued by the High Commissioner under the usual procedure the emigration department has a perfect right to dispose of them as it thinks best.

Oral Answers to Questions — ROYAL AIR FORCE.

CONTRACTS.

Air: McEntee: asked the Under-Secretary Of State for Air whether he is aware that complaints were lodged six weeks ago that Messrs. F. W. Rigby and Company, of London, are not acting in compliance With the fair-wages clause as regards wages, hours, and conditions; whether these complaints have been investigated; and, if so, with what result?

The Under-Secretary of State for Air (Lieut.-Colonel Muirhead): The complaints made in this case are being made the subject of careful inquiry, but the investigations are not yet completed.

Mr. McEntee: Does not the hon. and gallant Gentleman think that six weeks is a sufficiently long time for the inquiry, and is he not aware that there is grave dissatisfaction as the result of the delay?

Lieut.-Colonel Muirhead: I can only say that the investigation is being carried out with all expedition.

Mr. T. Smith: asked the Under-Secretary of State for Air whether the contracts made by the Air Ministry, including those for the provision of tankage for the storage of reserve supplies of oil, can be made the subject of competitive tender by all firms on the official list of contractors who are capable of executing the work; and, if not, for what reasons?

Lieut.-Colonel Muirhead: The tankage to which the hon. Member refers will for the most part be erected on land owned or leased by the Air Ministry, and it is proposed to employ the oil companies who supply the Air Ministry with aviation fuel as agents for the erection of the installations that are required; it will be a provision of the agency agreements that competitive tendering is resorted to wherever practicable. The answer to the hon. Member's question is to that extent in the affirmative. There are, however, some cases in which use is being made of existing installations owned by the oil companies and on their land, and in these cases there is no alternative to a direct contract with the oil company which is concerned, and whose receiving and issuing facilities have to be utilised.

Mr. Smith: If these are not all subject to competitive tenders, how is the price worked out?

Lieut.-Colonel Muirhead: The procedure by which the price is ascertained has been explained on a good many occasions in this House.

Mr. Garro Jones: Does the hon. and gallant Gentleman remember that in previous contracts for the supply of steel structures the steel suppliers tendered precisely the same prices? What safeguard is there in the case of tankage?

Lieut.-Colonel Muirhead: The question of steel is a different matter. There are in a good number of cases special conditions which render the demanding of competitive tenders not very applicable.

Mr. H. G. Williams: Is it the practice for all tenders to be on the same basis, or are there tenders considered on the basis of varying wage rates?

Mr. Garro Jones: asked the Under-Secretary of State for Air whether he will state, having regard to the fact that more stringent rules govern the placing of noncompetitive than of competitive contracts, in which class fall those contracts for which a number of contractors have tendered precisely the same price?

Lieut.-Colonel Muirhead: I would refer the hon. Member to the reply which my right hon. Friend the Chancellor of the Exchequer gave to him yesterday on this matter.

Mr. Garro Jones: Is the hon. and gallant Gentleman aware that the Chancellor of the Exchequer was unable to give an answer?

Lieut.-Colonel Muirhead: No, the Chancellor of the Exchequer said that he was unable to lay down a general proposition, nor am I.

Mr. Garro Jones: asked the Under-Secretary of State for Air whether there is any improvement in the percentage of competitive to non-competitive contracts placed by the Air Ministry in 1935, having regard to the fact that only 15 per cent. of the contracts were in that year competitive?

Lieut.-Colonel Muirhead: The figure of 15 per cent. to which the hon. Member refers related only to airframe contracts. The figures for all contracts for the financial years 1935 and 1936 were 32 per cent. and 28 per cent. respectively of the total values of the contracts placed.

Mr. Garro Jones: asked the Under-Secretary of State for Air whether he can estimate for what further period it will be necessary for the Air Ministry to disregard, in the placing of contracts, those rules which the Public Accounts Committee have approved; and whether he can assure the House that the Secretary of State will, at an early date, be able to find time to give prior approval to contracts as high as £700,000?

Lieut.-Colonel Muirhead: I would refer the hon. Member to the reply which my right hon. Friend the Chancellor of the Exchequer gave to him yesterday on this matter.

Mr. Garro Jones: Has the contract which I have specified for £700,000, which did not receive the prior assent of the Minister yet received assent ex post facto?

Lieut.-Colonel Muirhead: I think the hon. Member's question related to the procedure which was going to be followed, and my answer gave him the answer he required.

ARMY CO-OPERATION SQUADRONS.

Mr. Lees-Smith: asked the Under-Secretary of State for Air, whether the seven Army co-operation squadrons projected in the White Paper of March, 1936, are yet complete?

Lieut.-Colonel Muirhead: No, Sir; but the two outstanding squadrons are due to form on the 28th of the present month.

Oral Answers to Questions — AVIATION.

SCANDINAVIAN SERVICE.

Mr. Perkins: asked the Under-Secretary of State for Air whether he is aware that Imperial Airways, Limited, run no service to Scandinavia, but encourage their passengers to fly by Belgian, French, German, and Dutch air-lines; and what proportion of the subsidy earned by Imperial Airways, Limited, during 1936 was paid to these foreign air-lines?

Lieut.-Colonel Muirhead: As regards the first part of the question, I am not aware of justification for the suggestion which my hon. Friend makes, and, as regards the second part, I understand that no proportion of the subsidy was so paid.

Mr. Perkins: asked the Under-Secretary of State for Air whether he is aware that the Government subsidise British Airways, Limited, to run a daily service to Scandinavia; for what reason is this service not advertised in the Imperial Airways Gazette, although German, Belgian, Dutch, and French air-lines are advertised; and whether he will represent to Imperial Airways, Limited, that, as they receive Government subsidy, they should advertise other British aviation firms in preference to foreign firms?

Lieut.-Colonel Muirhead: I am taking this matter up with. Imperial Airways.

SUBSIDISED SERVICES (FOREIGN AIRCRAFT).

Mr. Simmonds: asked the Under-Secretary of State for Air what steps he has taken towards the provision of airliners of British manufacture to replace German and American aircraft now being utilised by British subsidised air services; and when such change will be made?

Lieut.-Colonel Muirhead: I regret that I cannot at present usefully add to the reply given to my hon. Friend on 10th February last. The question is still under active consideration, but it cannot yet be said what measure of assistance the Air Ministry may be able to afford in this matter.

Mr. Simmonds: Will my hon. and gallant Friend bear in mind that this is having a serious effect on the purchase of civil aircraft by the Dominions, and that they are now buying extensively German and American aircraft, because his hon. Friend has set the example?

Lieut.-Colonel Muirhead: I will bear in mind what the hon. Member has said.

AERIAL SIGNPOSTS.

Mr. Day: asked the Under Secretary of State for Air what schemes his Department have under consideration for the introduction or marking of aerial signposts?

Lieut.-Colonel Muirhead: The Air Ministry has no scheme for this purpose in contemplation.

Mr. Day: Can the Minister say whether various companies have been asked to have the names of towns placed on the tops of gasometers?

Oral Answers to Questions — GOVERNMENT DEPARTMENTS.

AIR MINISTRY (WOMEN CLERICAL OFFICERS).

Mr. Kelly: asked the Under-Secretary of State for Air whether there are any women clerical officers working in his Department; and, if not, whether there is any objection to their being employed in this Ministry?

Lieut.-Colonel Muirhead: Two hundred and sixteen women clerical officers are employed in the Air Ministry.

MESSENGERS.

Mr. Parker: asked the Financial Secretary to the Treasury why, having regard to the fact that many comparable State servants are established, the overwhelming majority of Government messengers are not established although permanently employed; and whether, pending any such extension of establishment rights to Government messengers, he will consider increasing the existing proportion of established to unestablished messengers?

The Financial Secretary to the Treasury (Lieut.-Colonel Colville): I would refer the hon. Member to the answer which I gave yesterday on this subject to the hon. Member for Deptford (Mr. W. H. Green).

Oral Answers to Questions — TRANSPORT.

BEDLINGTON FURNACE BRIDGE.

Mr. R. J. Taylor: asked the Minister of Transport when the new bridge which is to take the place of the Bedlington Furnace bridge is to be commenced?

The Minister of Transport (Mr. Burgin): Land has to be acquired and contracts placed, but I hope that work will be commenced in about six months time.

TRUNK ROADS, SOUTH WALES.

Mr. James Griffiths: asked the Minister of Transport whether he will consider expediting the work of improvements on the national trunk roads that run through South Wales, in order to provide employment for the large numbers still unemployed in that area?

Mr. Burgin: I will bear in mind the representations of the hon. Member, though he will be aware that traffic requirements must be the primary consideration.

Mr. Griffiths: Does not the right hon. Gentleman agree that in the present state of the labour market it would be beneficial in the national interest to concentrate work in these areas?

ACCIDENTS, GLASGOW—EDINBURGH ROAD.

Mr. Anstruther-Gray: asked the Minister of Transport the number of fatal accidents that have occurred on the new Glasgow—Edinburgh road during the last two years, respectively; and how many of these involved pedal cyclists?

Mr. Burgin: There were 13 fatal accidents on this road in each of the years 1935 and 1936, of which six in 1935 and two in 1936 involved pedal cyclists.

GREAT WEST ROAD (EXTENSION).

Mr. Simmonds: asked the Minister of Transport when work will commence on the Cromwell Road extension to the Great West Road; and when it is proposed that this highway shall be opened for through traffic?

Mr. Burgin: I hope that work will commence early next year, and that the road will be completed in 1941.

PEDESTRIAN SUBWAYS AND BRIDGES.

Mr. Simmonds: asked the Minister of Transport whether he is willing to make a substantial contribution towards the construction of pedestrian subways or bridges at dangerous points on the Great West Road and other main exits from London?

Mr. Burgin: Yes, Sir. Grants from the Road Fund at the appropriate rates are available towards the cost of pedestrian subways or bridges in suitable cases.

Mr. Simmonds: Does my right hon. Friend initiate action in these cases, or does he wait for the local authority even when he sees that the local authority is tardy?

Mr. Burgin: Perhaps my hon. Friend will put that question down.

CHARING CROSS BRIDGE.

Mr. Day: asked the Minister of Transport particulars of any decision which the Government have now arrived at following the receipt of the committee's report on the question of Charing Cross Bridge?

Mr. Burgin: The London County Council have been informed that if they decide to proceed with this scheme, it would rank for the most favourable treatment accorded to other major works of improvement in urban areas.

PEDESTRIAN CROSSING BEACONS, NEWCASTLE-UPON-TYNE.

Sir N. Grattan-Doyle: asked the Minister of Transport whether he has finally refused to make a grant from the Road Fund to the Newcastle City Council for the purpose of illuminating the pedestrian crossing beacons within its area; and, if so, whether he will state upon what grounds such decision has been based?

Mr. Burgin: I take the view that the illumination of these beacons is unnecessary. If a crossing is insufficiently conspicuous at night it is better to improve the street lighting so that not only the crossing but the pedestrians who use it may be made more visible to drivers.

Sir N. Grattan-Doyle: Is my right hon. Friend aware that there are special conditions in Newcastle, and will he take the trouble to see what the conditions are? Is he aware that there is profound dis-

appointment in Newcastle at his refusal to grant this request, and will he look into the matter again?

Mr. Burgin: I will certainly take any amount of trouble to ascertain conditions in Newcastle, but we can trace no formal application from the corporation for a grant in this matter. Perhaps my hon. Friend will confer with me.

GOODS TRANSPORT.

Sir N. Grattan-Doyle: asked the Minister of Transport whether the Transport Advisory Council has yet appointed a committee to inquire into the question of co-ordinating the various methods of goods transport; and whether it is proposed to invite evidence from the interested parties before making recommendations?

Mr. Burgin: Yes, Sir. The committee in question was set up in November, 1935. The committee comprises representatives of various interests, and I understand that they do not think it necessary at this stage to take further evidence from outside bodies.

CYCLE TRACKS.

Sir Alfred Beit: asked the Minister of Transport whether he will take steps to make compulsory the use by bicyclists of special cycling tracks where provided; but whether, before doing so, he will see that those tracks are in every way safe and suitable for the purpose?

Mr. Burgin: With regard to the first part of the question, I have no present intention of taking the course suggested. As to the second part, so far as it arises, my Department has recently drawn the attention of all highway authorities to the importance of providing satisfactory cycle tracks.

Sir A. Beit: What is the use of providing these cycle tracks if they need not be used by cyclists?

Mr. Burgin: I think the House will appreciate that there must be a considerable length of cycle tracks before any question of this kind can arise. I sincerely hope that cyclists will progressively use the facilities which are provided for them.

HIGHWAYS (TREES AND SHRUBS).

Sir A. Beit: asked the Minister of Transport whether he has urged upon the


highways authority of the county of Essex the desirability of completing the work of planting trees and shrubs along Eastern Avenue, leading to Southend; and what action they have taken?

Mr. Burgin: I have drawn the attention of all highways authorities to the desirability of planting trees and shrubs beside roads. I understand that, so far as Eastern Avenue is concerned, the borough of Ilford has taken action in this regard.

Mr. Macquisten: Is the Minister aware that Czechoslovakia and other places have planted their highways with apple trees? [Interruption.] Well, as a consequence, they do not require a National Health Insurance Act.

Sir A. Beit: Is it not possible for my right hon. Friend to ask the other boroughs in the same district to do what Ilford has already done?

Mr. Burgin: I think the Ministry have already asked the county surveyor of Essex to look into the matter. Perhaps that request might be repeated.

Oral Answers to Questions — DEFENCE.

ARMS MANUFACTURE (INSPECTIONS).

Mr. Noel-Baker: asked the Minister for the Co-ordination of Defence the number of officers and other personnel employed during the year 1936–37 in inspecting the arms supplied to His Majesty's Government by private firms and of the expenditure incurred for this service by the Admiralty, War Office and Air Ministry, respectively?

The Minister for the Co-ordination of Defence (Sir Thomas Inskip): No separate record is kept of the numbers or cost of personnel employed in inspecting arms supplied by private firms, as distinct from the output of Government factories, nor is there any separate record with regard to the inspection of arms as distinct from technical equipment and stores. I regret, therefore, the information asked for cannot be obtained.

FOREIGN MACHINE TOOLS.

Mr. Kelly: asked the Minister for the Co-ordination of Defence the countries from which machine tools have been ordered for the factories engaged on munitions for this country?

Sir T. Inskip: Since 1st April, 1936, Government orders for machine tools for the manufacture of munitions have been placed in the following countries:

The United Kingdom.
The United States of America.
Belgium.
Czechoslovakia.
France.
Germany.
Holland.
Switzerland.
I regret that information is not available as to orders placed by private firms.

Mr. Kelly: Has the right hon. Gentleman assured himself that British tool makers were so busy that they could not engage in the manufacture of the machines which were ordered from other countries?

Sir T. Inskip: Yes, certainly. In some cases the machines were of a very special type, and were not made in this country.

Mr. Thorne: Is the Minister not aware that the edged tools made in this country are the best in the world?

Sir T. Inskip: I have no doubt that is so.

Mr. Thorne: Then why do you not place more orders at home?

REGENT'S PARK (RECREATION FACILITIES).

Mr. Wakefield: asked the First Commissioner of Works whether he is aware of the lack of suitable changing accommodation for those who take part in organised physical recreation and who play games in Regent's Park; and, in view of the danger to health, especially to young persons, as a result of the unsatisfactory conditions now existing, will he take immediate action to remedy the position?

The First Commissioner of Works (Sir Philip Sassoon): I am aware that the changing accommodation is at times inadequate, owing to the increased use now made of the facilities for sport and recreation in the park, and I am considering the possibility of adding to it.

CORONATION STANDS.

Mr. Kelly: asked the First Commissioner of Works whether the timber


used in the stands erected for the Coronation has been disposed of by contract; and, if so, will he state the names of the firms to whom the timber is sold?

Sir P. Sassoon: The timber used in the stands erected for the Coronation was hired from the contractors, who erected the stands and who are now removing them.

Mr. Kelly: Does that apply to the whole of the stands?

Sir P. Sassoon: Yes, Sir.

AGRICULTURE (WALES).

Mr. J. Griffiths: asked the Minister of Agriculture whether he will bear in mind the serious decrease in the numbers employed in agriculture in Wales during the past seven years in framing the Government's long-term policy, particularly in regard to the improvement of grass lands and the provision of lime, which is available in abundance in South Wales?

The Minister of Pensions (Mr. Ramsbotham): I have been asked to reply. I can assure the hon. Member that all relevant considerations are being taken into account in developing the policy which my right hon. Friend announced to the House on 27th May. As regards the provision of lime, I would refer the hon. Member to replies given on 31st May and 2nd June to the hon. Member for Barnard Castle (Mr. Sexton).

SCOTLAND (HERRING INDUSTRY BOARD).

Mr. Boothby: asked the Secretary of State for Scotland whether he is satisfied with the policy and performance of the Herring Industry Board; and whether he proposes to introduce legislation this Session to increase the powers of the Board?

The Under-Secretary of State for Scotland (Mr. Wedderburn): My right hon. Friend is awaiting the annual report of the Herring Industry Board which will be presented to Parliament without delay. For the rest, I can add nothing to the replies which he gave to my hon. Friend on 20th April and 4th May.

Mr. Boothby: Is my hon. Friend aware that nobody except the Scottish Office is very satisfied with the performance of the Herring Board up to date, and can he not do something to ginger them up?

Mr. Wedderburn: It is a very good rule never to be satisfied with anything.

Oral Answers to Questions — TRADE AND COMMERCE.

GREAT BRITAIN AND UNITED STATES (TRADE DISCUSSIONS).

Mr. Boothby: asked the Secretary of State for Dominion Affairs whether the question of an Anglo-American commercial agreement is under consideration at the Imperial Conference; and, if so, whether in view of the urgent necessity of effective economic co-operation between this country and the United States, an announcement of any decisions reached will be made before the conclusion of the conference?

The Under-Secretary of State for Dominion Affairs (Marquess of Harting-ton): I would refer my hon. Friend to the reply which my right hon. Friend the President of the Board of Trade made in answer to a question by the hon. Member for Seaham (Mr. Shinwell) yesterday, to which there is nothing to add.

Mr. Boothby: asked the Secretary of State for Dominion Affairs whether his attention has been drawn to the premature disclosures in certain organs of the Dominions Press of confidential information regarding the proposals of the United States Government for a commercial agreement with this country; and whether he can give an assurance that His Majesty's Government will do everything in their power to prevent these disclosures from affecting prejudicially the forthcoming negotiations?

Marquess of Hartington: I can assure my hon. Friend that His Majesty's Government will do anything in their power to prevent any harm of the kind which he suggests, though I am not aware that the position is as stated in the first part of his question.

PUBLIC UTILITY COMPANIES (CONTROL OF SHARES).

Mr. Liddall: asked the President of the Board of Trade whether he will request the Economic Advisory Council to


consider whether it is in the public interest that London flotation firms, following the Japanese Zaibatsu plan, should buy control of numbers of gas and water companies in the North of England, Wales, Scotland and the Home Counties, and then, for their own benefit, create and sell to the public preference shares based upon these public utility concerns, the equities and voting rights of which are retained by the flotation firms; and whether his attention has been drawn to a transaction of this kind advertised on 7th June?

The Parliamentary Secretary to the Board of Trade (Captain Euan Wallace): I am aware of the offer referred to, and of other offers of capital by holding companies which have acquired control of gas undertakings; and am considering whether any further inquiry into the matter is called for.

NATIONAL FUEL AND POWER COMMITTEE.

Lieut.-Commander Fletcher: asked the President of the Board of Trade whether consideration has been given to reviving the National Fuel and Power Committee; and, if so, what decision has been arrived at?

Captain Wallace: The questions which arise from time to time in relation to fuel and power are so varied that it has been found more appropriate to set up specially constituted committees to deal with them; and my right hon. Friend sees no reason at present for reviving the National Fuel and Power Committee.

Mr. J. J. Davidson: Can the hon. and gallant Gentleman inform the House how many committees have been set up with regard to this question and how many reports have been received by his Department?

Captain Wallace: Not without notice. I suggest that the hon. Gentleman puts the question down.

INDIA AND BURMA (POSTAL AND CABLE RATES).

Sir Percy Hurd: asked the Under-Secretary of State for India whether he has considered the harmful effect upon relations between India and Burma of the increased postal and telegraphic rates

imposed by the Burma Government, especially in view of the understanding that for a period of years there should be no disturbance of existing tariffs and trade relations; and whether he will make representations to the Governments of India and Burma in the sense of the resolution recently adopted at the annual conference of the Empire Press Union, a copy of which has been submitted to him?

Major Sir George Davies (Comptroller of the Household): I have been asked to reply. My Noble Friend has already conveyed to the Governments of India and Burma the views of the Empire Press Union concerning the increases which have been made in the postal and cable rates between India and Burma, and he proposes to send them a copy of the resolution referred to in the question. I should, however, make it plain that this is a matter within the competence of the two Governments to decide for themselves, and that their freedom in this respect is not in any way affected by the arrangements relating to tariffs and trade relations prescribed by the India and Burma (Trade Regulation) Order, 1937.

Sir P. Hurd: asked the Under-Secretary of State for India whether, in view of the general desire to improve the trade and other relations between India and other parts of the Empire, he will invite the Government of India to confer as to the advantage of lowering the telegraphic Press rates which were increased in 1935, and also of admitting newsprint into India free of duty as is the practice in many countries, including the United Kingdom and the United States?

Sir G. Davies: My hon. Friend's suggestions will be brought to the notice of the Government of India.

Sir John Haslam: Will my hon. and gallant Friend add to the communication that exactly the same need arises in regard to the cotton trade as in regard to Press reports?

ELECTORAL REFORM (ESSEX).

Mr. Parker: asked the Secretary of State for the Home Department whether he is aware that the Romford Division now has 178,000 electors and that the average electorate for the whole


country is about 50,000 electors; and whether arrangements can now be made to provide separate Members of Parliament for each of the four towns: Dagenham, 54,000 electors; Barking, 45,000 electors; Hornchurch, 44,000 electors, and Romford, 33,000 electors, seeing that they are near the average and are increasing rapidly in population?

The Under-Secretary of State for the Home Department (Mr. Geoffrey Lloyd): The answer to the first part of the question is in the affirmative. As regards the second part, I would refer the hon. Member to the answer given to the right hon. Member for Kirkcaldy (Mr. Kennedy) on 6th April last.

Mr. Parker: Can the hon. Gentleman say when the Government will be able to make a statement on this matter?

Mr. Lloyd: I could not add to the answer which was given on 6th April.

HOME INDUSTRIAL WORK (CHILDREN).

Mr. Denman: asked the Home Secretary whether his attention has been called to the charges made of excessive employment of children at home on industrial work; whether he can give any information as to the extent of this practice; and what steps he is taking to stop it?

Mr. Lloyd: I am obliged to my hon. Friend for calling attention to this matter, about which no complaints have reached the Home Office. In 1931, as the result of an inquiry, it was reported by the education authorities that 652 boys and girls aged 12–14 were employed in industrial work at home within the limits allowed by the law. My right hon. Friend is proposing to ask the education authorities in the near future for information as to the application of the law as amended by the Children and Young Persons Act, 1933, and this information will include the point now raised.

Mr. J. Griffiths: Has the attention of the hon. Gentleman been called to the growing practice of dismissing young lads and girls at 18 years of age and employing children of 14 and 15 in their places?

Mr. Lloyd: That is an entirely different question.

Mr. Macquisten: Would it not be better for the Government to consider taking steps to prevent children being employed?

FOREIGN LOANS.

Mr. Craven-Ellis: asked the Chancellor of the Exchequer whether the advisory committee appointed in April, 1936, has been called upon to advise him upon any particular application of foreign issues; what is the total sum and rates of interest involved in their recommendations; to what countries have loans been made and for what purpose; and will he say if there are any radical alterations of the restrictions on foreign issues contemplated?

Lieut.-Colonel Colville: In reply to the first and second parts of the question, the total of the sums in respect of which applications have been before the Foreign Transactions Advisory Committee since April, 1936, can only be stated very approximately. The total amount of issues passed is about £37,000,000, of which about £10,000,000 is proposed to be remitted abroad. The total of issues refused amounts to about £31,000,000, of which about £29,500,000 would have gone abroad. The rates of interest varied according to the purpose of the issues. In reply to the third part, the cases have fallen mainly under the heading of offers of share or loan capital to the public involving the remittance of funds abroad rather than under the heading of financing directly on behalf of foreign Governments or other public authorities. In reply to the last part of the question, I would refer my hon. Friend to the answer given by my right hon. Friend the Prime Minister to my hon. Friend the Member for Gravesend (Sir I. Albery) on 25th February, 1937.

BRITISH MONETARY POLICY.

The following question stood upon the Order Paper in the name of Mr. CRAVENELLis:

70. "To ask the Chancellor of the Exchequer whether the representatives of the British Commonwealth now assembled in London for the Imperial Conference will consider the advisability of re-affirming the declaration announced in Cmd. No. 4403, and issued on 27th July, 1933."

Mr. Craven-Ellis: In view of the reassuring statement made by the Chancellor of the Exchequer yesterday in reply to a question put to him by a member of my monetary committee, the hon. Member for East Aberdeen (Mr. Boothby), which statement has done so much to restore confidence, I desire to withdraw this question.

UNITED STATES (BRITISH DEBT).

Mr.Craven-Ellis: asked the Chancellor of the Exchequer whether His Majesty's Government continue to acknowledge the debt owing to the United States of America for loans made, services rendered, and goods supplied during the great War; and is any provision being made to settle the debt?

Lieut.-Colonel Colville: I would refer my hon. Friend to the reply given to him by my right hon. Friend's predecessor on 29th April last, to which I have nothing to add.

Mr. Davidson: Will that acknowledgement be merely formal, in order that nothing shall be added to the debt?

Lieut.-Colonel Colville: That question does not arise out of the original question.

EXCHANGE EQUALISATION ACCOUNT.

Mr. Bellenger: asked the Chancellor of the Exchequer whether the present statutory limit of the Exchange Equalisation Account is sufficient to finance present currency transactions?

Lieut.-Colonel Colville: The answer is in the affirmative.

ADVERTISING MATTER (DUTY).

Mr. T. Smith: asked the Financial Secretary to the Treasury whether he is aware that the duty imposed upon advertising matter for which no charge is made is vexatious to business interests; and whether he will take steps to have this matter reconsidered, with a view to providing that small quantities of advertising matter, having little or no intrinsic value and supplied without charge, shall be regarded as having no value for duty purposes?

Lieut.-Colonel Colville: The extension of the present exemption in favour of advertising matter is primarily a question for the Import Duties Advisory Comittee. Advertising material which is not within the exemption, and therefore liable to duty ad valorem must, of course, be valued in accordance with the statutory definition of value.

MEMBERS' SALARIES.

Mr. Denman: asked the Financial Secretary to the Treasury how many Members of Parliament there are whose expenses of office for Income Tax purposes absorb their whole salary; and what is the average proportion of salary absorbed by expenses among Members as a whole?

Lieut.-Colonel Colville: I regret that I cannot furnish my hon. Friend with the information for which he asks. It is not the practice to give particulars of the Income Tax assessments upon, or the amount of the deductions allowed to, a particular class of taxpayers. I can, however, inform my hon. Friend that there is a large number of cases of Members of Parliament in which the deduction allowed for expenses exceeds the flat rate deduction of £100 fixed under the Rules applicable to Schedule E of the Income Tax Act, 1918.

Mr. Denman: As we are to discuss the question of salaries of Members, ought we not to know what proportion of the salary is absorbed for expenses? Is there any real objection to informing the House of the facts?

Lieut.-Colonel Colville: The general rule which I have mentioned is in the interests of individuals, and I am very loath to depart from it.

Mr. Thorne: Is not the Financial Secretary aware that when Members get their warrants the Income Tax is stopped, and that the authorities do not give us the opportunity of paying it?

Mr. Denman: May I put the question to you, Mr. Speaker? These facts, I take it, are known in the Fees Office, and, if the Treasury declines to give us these simple facts, are we not entitled to obtain them from the Fees Office?

Mr. Speaker: That does not appear to be a question which it is easy to answer on the spur of the moment, but I should say, "Certainly not."

POOR LAW RELIEF (PENSIONERS).

Mr. David Adams: asked the Financial Secretary to the Treasury whether he is aware that the County Council of Durham expends approximately the sum of 300,000 annually upon outdoor relief granted in supplementing old age pensions, widows' and orphans' pensions and workmen's compensation; and whether he proposes to introduce legislation amending the appropriate Acts whereby persons concerned may be enabled to receive adequate amounts for their requirements, and thus obviate the necessity of applying for public assistance?

Lieut.-Colonel Colville: I am not aware of the figure of relief quoted by the hon. Member, as it includes workmen's compensation, as to which I have no information. As regards old age and widows' pensions, the facts over the country as a whole in relation to poor relief do not support the assumption on which the hon. Member's question is based, as the number of old age and widow pensioners who are in receipt of relief is less than 10 per cent. of the total number of such pensioners.

Mr. Adams: Are we to understand that the Government are satisfied with the continued impoverishment of these people and with the necessity for drawing upon the local authorities accordingly?

Lieut.-Colonel Colville: I cannot agree with the premise of the hon. Gentleman's question.

Mr. T. Smith: Do we understand than the Government do not intend to bring in any amending legislation with regard to compensation?

Lieut.-Colonel Colville: Compensation is not a matter with which I could deal.

Mr. G. Griffiths: Is the Financial Secretary aware that in almost every case, when a woman becomes a widow, she applies almost immediately for public assistance, because the los. is of no use to her?

Lieut.-Colonel Colville: That is not borne out by the figures I have quoted.

I repeat that the number of old age and widow pensioners who are in receipt of relief is less than 10 per cent. of the total number of such pensioners.

Mr. Davidson: Is the right hon. and gallant Gentleman aware that in Glasgow there has been an increase of 3,000 old age pensioners seeking public assistance during the past two years?

Oral Answers to Questions — UNEMPLOYMENT.

ASSISTANCE (WIDOWS).

Mr. Logan: asked the Minister of Labour whether, in the view of his Department, a widow with children attending school fulfils the term "availability for employment" under the Unemployment Assistance Board scheme; and by what authority are these cases being transferred from public assistance committees to the Unemployment Assistance Board?

The Parliamentary Secretary to the Ministry of Labour (Mr. Butler): The question whether any person is within the scope of the Unemployment Assistance Scheme, including the question whether a person is capable of and available for work within the meaning of the Unemployment Assistance Act, 1934, is a matter for decision by the board's officer or, on appeal, by the Chairman of the Appeal Tribunal. The decision in cases of the kind to which the hon. Member refers must depend upon the individual circumstances of the applicant.

Mr. Logan: Is the definition of the term "availability for employment" within the jurisdiction of the board; and if that be the case why is this injustice being done to widows by precluding them from getting relief and not allowing them to stay at home with their children? Is that the policy of the board?

Mr. Butler: The board have to judge each individual case, but I should not like to say that an injustice has been caused.

Mr. Logan: May I ask the hon. Gentleman, as representing the Minister responsible for the board in this House, whether he agrees with this decision, and whether he gives advice to the board on questions of injustice such as are resulting from this decision?

Mr. Butler: I should have to see an individual case before I could tell what the injustice was.

Mr. Logan: This is general in Liverpool.

SUGAR MANUFACTURING.

Mr. R. Gibson: asked the Minister of Labour how many persons engaged in sugar-manufacturing processes have been admitted into the United Kingdom from the United States of America and elsewhere, respectively, during each of the years subsequent to 1918?

Mr. Butler: I am having this information extracted so far as it is available, and will circulate a statement in the OFFICIAL REPORT.

Mr. Gibson: Can the hon. Gentleman give any idea of the total number?

Mr. Butler: I have not the figures before me, but I understand that there has been a very considerable reduction in later years.

Mr. Gibson: Has a desire been expressed on the part of these immigrants to be repatriated, and has anything been done to facilitate that, in view of the large number of sugar-boilers who are unemployed in Greenock and elsewhere?

Mr. Butler: The hon. and learned Member asked me a question with regard to the number. If he desires further information, perhaps he will put down another question.

NEW TAX PROPOSALS.

Mr. Attlee: (by Private Notice) asked the Prime Minister, when the Government's proposals in regard to the new tax will be presented to the House.

The Prime Minister (Mr. Chamberlain): I cannot yet say with certainty when the proposals will be available to the House, but my right hon. Friend hopes to be able to put the necessary Ways and Means Resolution on the Paper in the course of next week.

PRIVATE BILLS (GROUP K).

The CHAIRMAN OF WAYS AND MEANS informed the House that the Committee on Group K of Private Bills not being appointed to meet until Tuesday next, the parties promoting the Hertfordshire County Council (Coffie Valley Sewerage,

etc.) Bill, which was set down for consideration on the first day of meeting of the Committee, had appeared before him and proved that the evidence of Mr. Griffith John Griffiths was essential to their case, and that his attendance could not be procured without the intervention of the House.

Ordered, That Mr. Griffith John Griffiths do attend the Committee on Group K of Private Bills on Tuesday next, at Eleven of the Clock.

MESSAGE FROM THE LORDS.

That they have agreed to Civil List Bill, without Amendment.

FINANCE BILL.

Considered in Committee.

[Captain BOURNE in the Chair.]

CLAUSE 1.—(Continuation of duty on hops, etc., and of additional duty and drawback on beer.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

3.45 P.m.

Mr. Charles Brown: We cannot allow this Clause to pass without some comment. These duties, however, have been referred to recently in the House, and I want to make a brief reference to the matter on this occasion. As the Committee were reminded on the Budget Resolutions, these duties were imposed first of all in 1925, and on that occasion my hon. Friend the Member for Bishop Auckland (Mr. Dalton) said that in all probability they were the first step towards a scientific tariff. He little knew, I think, when he made that remark, how soon we should pass into the phase where we have a system of Protection in this country. The immediate proposal before us in this Clause is to renew the duties for another four years. I do not know what particular magic members of the Government find in the word "four," but the duties were first imposed in 1925, they were renewed in 1929 and again in 1933, and the proposal now is that they should be renewed once more for another four years. I do riot know why such particular stress should be laid upon the period of four years, and why certain members of the Government should attach such importance to that figure. The ex-Prime Minister, for instance, told us some time ago that Parliaments ought only to last for four years, although we have an Act on the Statute Book which permits them to endure for five years. I do not know what is the reason for continuing this four-year term.
During the Committee stage of the Budget Resolutions, the Financial Secretary, in reply to my right hon. Friend the Member for Keighley (Mr. Lees-Smith), used only one argument in support of the continuation of these duties. He suggested that their removal would unsettle the market. He used no other

argument, but repeated that in one or two different forms. I can imagine something of what was in his mind when he said that, having regard to the recent experience of the Government in connection with certain proposals which they made. Hon. Gentlemen on the benches behind them laid such stress on the fact that those proposals had disturbed markets or had disturbed business that the right hon. Gentleman who was then Chancellor of the Exchequer, and is now Prime Minister, had to bow to their will and withdraw the proposals. We are to have other proposals in a little while, and I hope they will not disturb hon. Gentlemen opposite as the original ones did.
I think I understand why the Financial Secretary used that argument on the earlier occasion. He had no desire further to unsettle markets or disturb business by the withdrawal of these duties. But I cannot understand what force there was in his argument when the whole position is examined. Under the Hops Marketing Scheme there is an arrangement between the brewers and the hop-growers under which, as I think he told the House, the brewers agreed to import not more than 15 per cent. of their total requirements. If that agreement holds good, I cannot imagine how the removal of the duty will unsettle the market. The only basis on which there would be any force in the right hon. Gentleman's argument is that, if the duty were removed, the brewers would not honour the agreement that they now have between themselves and the hop-growers.
My right hon. Friend the Member for Keighley complained that this was one of the highest duties in our tariff system, and I think that that was a legitimate complaint. The building of a scientific tariff is an interesting process, and some parts of the tariff wall are obviously higher than others. This is very high, and in this case there does not really seem, when one examines every aspect of the matter, any reason for the continuance of the duty. Only one other Member attempted to justify its continuance, and that was the hon. Member for South Croydon (Mr. H. G. Williams), who did so on the ground that the Marketing Bill originally was the product of a Labour Government and, by some curious mental twist, he imagined that it was an instalment of Socialism, and suggested that, if you co-ordinated that with the duty as


well, you got a sort of ideal economic condition as far as the industry was concerned. I cannot agree with him at all and, having examined the question as well as I could, my hon. Friends and I are sure that, unless some more forceful argument can be adduced from the Treasury Bench, we shall feel justified in voting against the Clause.

3.53 P. m.

The Financial Secretary to the Treasury (Lieut.-Colonel Colville): The hon. Member said that in moving the Financial Resolution relating to this Clause I used one argument only. If it was a good argument, it does not seem to me that it was necessary to supply any other. It seemed to me a very good one, and that view was endorsed by the majority of the House. The argument was, in short, that the removal of the duty would unsettle the market, and expose the trade to a flood of imports at cut prices. The Amendment which has been moved by the hon. Member opposite is not to extinguish the duty at once—

Mr. C. Brown: The Amendment was not called, and I did not move it.

Lieut.-Colonel Colville: I beg the hon. Member's pardon. The effect of removing the duty would, in our view, be harmful. It has yet to be proved that it has been harmful to interests in this country. In my belief it has had a steadying effect on the market, which cannot be shown to be anything but beneficial. It is true that the Brewers' Society have an agreement with the Hops Marketing Board, which regulates the price of English hops, providing for a standard average price and restricting imports. The agreement is of a voluntary character. He went on to say that human nature being what it is—[HON. MEMBERS: "What is it?"] I think human nature is very general; it is not confined to one part of the population. Human nature being what it is, the hon. Member held the view that in the absence of some duty there might be a danger of this agreement not being strictly adhered to.

Mr. C. Brown: I said I hoped the brewers would be the last people in the world not to honour their word.

Lieut.-Colonel Colville: Perhaps it is the method of presentation about which we are in dispute. I have little doubt that the hon. Member's suggestion was, in fact, that one reason why the Government were applying the duty for a further period was to ensure that the agreement would be complied with. Quite apart from that aspect of it, our view is that to remove the duty would be to take an action which is not generally called for by the people of the country, and would have an unsettling effect on the market. We, therefore, think it right that it should continue for a substantial period. The hon. Member asks, why four years? Four is not necessarily a golden number, but four years, in our view, is a proper period to give stability to the industry. [An HON. MEMBER: "There may be another Government before then."] I hope that stability would not disappear with such a change, which might not be in the direction that the hon. Member hopes. The House discussed this proposition at some length on the Financial Resolution, and the hon. Member has not brought any new argument to support his case. I claim, therefore, that the principle which was accepted by the House, that the duty should be continued for a further period, should now be endorsed by passing the Clause.

3.57 P.m.

Mr. Lees-Smith: The right hon. Gentleman has by no means dealt with the whole case that has been presented against the duty and I will fill up one or two of the gaps in his exposition of the subject. My hon. Friend pointed out that it was originally imposed because there had been control over the industry by the Government. In 1925 that control was withdrawn, and this duty was granted in its place. The fact that the industry was left without control was the whole reason and argument for introducing the duty. The Financial Secretary has not even mentioned the fact that the reason for the duty has now entirely passed away, because now the industry is subject to a control even tighter than that which was imposed upon it during the War. Under the Hops Marketing Board, producers of hops have about the tightest monopoly in the country. They can determine the output, they can prevent new entrants coming into the trade, they can sell licences and, as the result of


determining output, they can practically determine prices.
I will mention an incident which has been told me since the last Debate to show what control they have. A gentleman bought a farm. There were a few hops on it, though he really had not realised the fact. When he entered into possession, he received a letter offering him £100 for his licence to produce hops. He took no notice. A short time afterwards he received a letter offering him £300. Then he got suspicious, and went to his solicitor, who finally entered into negotiations by which he got £800 for this power to produce hops. This is the industry to which the right hon. Gentleman proposes to give additional protection on the ground that it cannot hold its own without this artificial aid.

Lieut.-Colonel Colville: Not additional protection—a continuation of the present position.

Mr. Lees-Smith: It proposes to continue the completely abnormal degree of protection which it at present enjoys. There is another feature of their position which has not been brought out in the Debate. They have not only this complete control over the home market, but by entering into an arrangement with the brewers they have got practical control over the foreign market—the arrangement by which the brewers can only use 15 per cent. of imports. Therefore, in over 85 per cent. of the home market they have succeeded in eliminating competition.
That is the industry we are discussing. It is the most sheltered, most protected, and most monopolistic industry of the whole range of industries in this country. What is the nature of the duty? An average duty, if you work it out under the tariff system, I believe reaches rather less than 20 per cent. A very special exception was made in the case of the iron and steel trade, which was given a duty of 33⅓ per cent., except for a very short period. This industry, which has every kind of assistance that the Government can give to hops, has a duty of nearly 50 per cent., a duty higher than anything in the whole range of duties. The Financial Secretary has never attempted to answer this exposition of the accumulation of privileges and monopolies which are granted to this one industry. There is no answer. The only reason why the thing continues is that there is only one

customer for this industry and the British public keeps no very close eye upon it. In fact the position of the industry now amounts to a ramp. It shows how far the present Government becomes the victim of vested interests in the case of an industry on which public attention is not concentrated.

4.3 P.m.

Colonel Gretton: I speak with some knowledge of this subject for I am what is described in the old Statutes as a common brewer of beer for sale. The origin of the duty was that the hop industry during the War was hard-hit, and the quantity of hops required to make British ale had been very greatly reduced by the conditions of war, followed by the excessively high duty on the article produced. The hop growers, who suffered considerably, went to the Government and asked that there might be a duty imposed upon hops imported in order to allow them to recover that trade. Finally, the duty was settled by the Government at the amount at which it now stands in the proposal before the Committee. I would call attention to the fact that there was a preference on British Empire hops so that they paid only two-thirds of the duty. It is quite true that subsequent to that the hop industry was still dissatisfied and thought that it had not sufficient protection. The hop growers went to the then Minister of Agriculture and he set up a Hops Marketing Board, giving practically entire control over the industry of hop growing.
The right hon. Member for Keighley (Mr. Lees-Smith) is quite correct; it is a monopolistic business. No one can enter upon it who was not engaged and registered as a hop grower when the Board was set up, and those who are in business are able to sell to someone else their right or privilege to grow hops under the regulations of the Board. For a man to get into business in any other way than that is even harder than for the proverbial camel to get through the eye of a needle. As a matter of fact the British brewers are very anxious to have a full and adequate supply of good British hops and have always relied in their business on that quality and class of hops. The imported foreign hops only make up the deficiencies in the British supply. We as brewers offer no opposi-


tion to this arrangement so long as it is worked in the way it is. The brewers might be very hard-hit indeed if there were a considerable failure of British hops in any year. At present we manage to carry on. The only reason we manage to carry on is that the hops are produced and that on the whole they are of the character and quality which suit the brewers. There is one matter in which we brewers have some anxiety, and that is as to whether the good quality of the best class of British hops will be kept up under this arrangement. There is undoubtedly a tendency for hop production to pass, as has been described, from one grower to another, and the right or monopoly which is sold does not necessarily require the growing of the highest class of hops. There is no reason why brewers should oppose this arrangement, which is working well enough, but it might happen in the period of four years that the whole conditions alter, and we should then come to the Government of the day, having regard to that position, and ask them to make some alteration in these arrangements to meet the new situation.

4.7 P.m.

Sir Percy Harris: We have just had an interesting side-light on this very remarkable industry. We could not have a better representative of the brewing industry than the right hon. and gallant Member for Burton (Colonel Gretton). At the risk of giving him an advertisement I would say that he brews beer of the best quality and that its character is beyond suspicion. The whole Debate is significant of the state in which we live now. I would remind the Committee that this is a Finance Bill, a Bill to provide the necessary revenue for carrying on the Government of the country. This particular Clause is not a revenue tax at all. Perhaps the Financial Secretary will say how much he anticipates it will bring to the Exchequer this year. It is, of course, a protective duty, to give a special privilege to a few people so that they can enjoy a monopoly in the provision of a certain crop of hops grown on certain lands which have been given the monopoly. I have a very vivid memory of the last Parliament and the setting up of the Import Duties Advisory Committee. The whole idea was that in future, when a tax was levied not for the

purpose of revenue, when it was to be renewed, altered, modified or added to, it was to be submitted to that Advisory Committee.
To-day we have no memorandum before us. We have not had the opportunity of knowing the views of these highly qualified gentleman whom we are asked to trust, to decide on the advisability of modifying or renewing the tax. We have no memorandum and no report and we do not know what inquiry has gone on. Has there been any inquiry by experts or has it been a put-up job between the two vested interests, the brewers and the hop growers? The right hon. and gallant Member for Burton is a little restless, I notice, and quite rightly. He is beginning to wonder whether the quality of the hops essential in the brewing of good beer is to be maintained. The Financial Secretary talked about human nature being what it is. He did not define human nature very closely, but I understand his suggestion is that human nature is not of a very high standard and generally looks after its own interests. That is his doctrine. Accepting that doctrine, is it not reasonable to assume that the hop growers, having a complete monopoly and guarantee for four years, will not make any special effort to improve the standard and quality of their crop? I hope that my hon. Friends of the Labour party will divide against the Clause. If the Clause is defeated I do not suppose that anyone who is a consumer of beer will suffer very much, although it has been suggested that some brewers produce beers that have not a very close acquaintance with hops.

Colonel Gretton: I do not want my hon. Friend to mislead the Committee. These matters are stated in precise terms and he can see exactly how much hops substitutes are used in the brewing industry. It is an insignificant quantity.

Sir P. Harris: I am not very worried about the beer drinkers. They can look after themselves, though in some rural districts, where there are tied houses, they have no choice of beer; they cannot for instance call out for a Bass, and they have to take whatever the publican chooses to give them. In some cases there is suspicion about the quality; at any rate I am told that that is so. I suggest that if we have to pass this Clause now the matter should be referred


to the Import Duties Advisory Committee, and we should have a report on the operation of this duty, on how it affects the supply of hops on the one hand and on the other hand how hardly it hits a great number of farmers in Kent with land suitable for hops—land which they grubbed up during the War as a result of the appeal to their patriotic instincts. They put their land under other crops of which there was a dire need then.

The Deputy-Chairman: The question whether this Clause has been before the Import Duties Advisory Committee I do not think has the slightest effect on the Hops Marketing Board.

Sir P. Harris: If this monopoly goes on under this protection obviously other farmers will not be able to produce hops. What I suggest is that if this duty is to be continued all farmers in England should have the advantage of it and it should not be limited to a privileged few. We are imposing a tax to protect the market and it is only fair that the advantage of it should be applied to every farmer who likes to produce hops. In the meantime I ask the Chancellor of the Exchequer to make representations to the Import Duties Advisory Committee—there are precedents for it—for a report on the whole working of the duty as a protectionist system, particularly in relation to the Hops Marketing Board.

4.15 p.m.

Brigadier-General Sir Henry Croft: I intervene for a few moments because there appears to be a good deal of misunderstanding on this matter. As I listened to the speech of the right hon. Gentleman the Member for Keighley (Mr. Lees-Smith), it was clear that there was some idea that this was a ramp in connection with the brewing industry as a whole. I do not think that he meant the hop industry, but the brewing industry.

Mr. Lees-Smith: Only the hop industry.

Sir H. Croft: The hon. Gentleman the Member for South-West Bethnal Green (Sir P. Harris) also seemed to indicate that this was a deal between the brewers and the hop growers. That appears to

be a complete misunderstanding. I belong to neither of these classes, but I know something about it. I venture to think that if anyone had reason to complain of any disadvantage, which has not been indicated, it would be the brewers who found themselves with a limited market and increased price. The truth of the matter is that the hop-growing areas of this country during the War and immediately afterwards were in a very parlous condition. A great deal of the hop land had been actually grubbed, and when once hop land has been grubbed, as the right hon. Gentleman knows, it is a most expensive process to get it under cultivation again. The result was that the British share of hops was likely to depreciate very much at a time when a large quantity of foreign hops was coming into the country. The consequence was that this Measure was instituted. It was not part of the general scheme, but it has undoubtedly been an astonishing success, because the hop-growing industry of this country is once more really prospering.

The right hon. Gentleman will believe me when I say that he is wrong in stating that there is no reason why the hop growers should try to get a better crop. It is well known by those who have studied the matter that there are different grades. The man who grows the good grade of hops gets a very much higher price than the man who grows the lower grades. The question I ask is whether there is anybody in this country who has really complained of the results of this duty. I should have thought that it was one of the outstanding financial successes of the last few years. In Sussex, Kent, Hampshire, Herefordshire and Worcestershire, they are grateful for this policy, because it has given stability to the industry, and we could not commit a more ghastly blunder than turn the whole of the fortunes of these counties back again, as would be the case if the duty were not continued.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 229; Noes, 118.

Division No. 223.]
AYES
[4.17 p.m.


Aoland Troyte, Lt. -Col. G. J.
Anstrulher-Gray, W. J.
Atholl, Duchess of


Albery, Sir Irving
Apsloy, Lord
Balfour, Capt. H. H. (Isle of Thanet)


Allan, Col. J. Sandeman (B'knhead)
Assheton, R.
Balniel, Lord


Amery, Rt. Hon. L. C. M. S.
Aster, Hon. W. W. (Fulham, E.)
Barrio, Sir C. C.




Baxter, A. Beverley
Gretton, Col. Rt. Hon. J.
O'Neill, Rt. Hon. Sir Hugh


Beamish, Rear-Admiral T. P. H.
Gridley, Sir A. B.
Ormsby-Gore, Rt. Hon. W. G. A.


Beauchamp, Sir B. C.
Grigg, Sir E. W. M.
Patriok, C. M.


Beaumont, M. W. (Aylesbury)
Grimston, R. V.
Peako, O.


Beaumont, Hon. R. E. B. (Portsm'h)
Guest, Hon. I. (Brecon and Radnor)
Peat, C. U.


Bernays, R. H.
Guinness, T. L. E. B.
Perkins, W. R. D.


Blair, Sir R.
Gunston, Capt. D. W.
Petherick, M.


Bossom, A. C.
Guy, J. C. M.
Pickthorn, K. W. M.


Bower, Comdr. R. T.
Hannah, I. C.
Pilkington, R.


Brocklebank, Sir Edmund
Harbord, A.
Radford, E. A.


Brown, Col. D. C. (Hexham)
Hartington, Marquess of
Ramsay, Captain A. H. M.


Bull, B. B.
Harvey, Sir G.
Ramsden, Sir E.


Bullock, Capt. M.
Haslam, H. C. (Horncastle)
Rathbone, J. R. (Bodmin)


Butler, R. A.
Haslam, Sir J. (Bolton)
Rawson, Sir Cooper


Campbell, Sir E. T.
Hepburn, P. G. T. Buchan.
Rayner, Major R. H.


Castlereagh, Viscount
Higgs, W. F.
Reed, A. C. (Exeter)


Cayzer, Sir C. W. (City of Chester)
Hills, Major Rt. Hon. J. W. (Ripon)
Reid, Sir D. D. (Down)


Cazalet, Thelma (Islington, E.)
Hoare, Rt. Hon. Sir S.
Rickards, G. W. (Skipton)


Cazalet, Capt. V. A. (Chippenham)
Holmes, J. S.
Ropner, Colonel L.


Chamberlain, Rt. Hn. H. (Edgb't'n)
Hope, Captain Hon. A. O. J
Ross Taylor, W. (Woodbridge)


Channon, H.
Hore-Belisha, Rt. Hon. L.
Salmon, Sir I.


Chapman, Sir S. (Edinburgh, S.)
Horsbrugh, Florence
Samuel, M. R. A.


Chorlton, A. E. L.
Howitt, Dr. A. B.
Sanderson, Sir F. B.


Christie, J. A.
Hudson, Capt. A. U. M. (Hack., N.)
Sandys, E. D.


Churchill, Rt. Hon. Winston S.
Hudson, R. S. (Southport)
Savery, Sir Servington


Clarke, F. E. (Dartford)
Hume, Sir G. H.
Scott, Lord William


Clarry, Sir Reginald
Inskip, Rt. Hon. Sir T. W. H.
Selley, H. R.


Clydesdale, Marquess of
James, Wing-Commander A. W. H.
Shaw, Major P. S. (Wavertree)


Cobb, Captain E. C. (Preston)
Jarvis, Sir J. J.
Shaw, Captain W. T. (Forfar)


Colfox, Major W. P.
Joel, D. J. B.
Simon, Rt. Hon. Sir J. A


Colman, N. C. D.
Keeling, E. H.
Smith, Bracewell (Dulwich)


Colville, Lt.-Col. Rt. Hon. D. J.
Kerr, Colonel C. I. (Montrose)
Smith, L. W. (Hallam)


Cooke, J. O. (Hammeismith, S.)
Kimball, L.
Smith, Sir R. W. (Aberdeen)


Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs)
Knox, Major-General Sir A. W. F.
Somervell. Sir D. B. (Crew)


Cooper, Rt. Hn. T. M. (E'nburgh, W.)
Lamb, Sir J. Q.
Somerville, A. A. (Windsor)


Cox, H. B. T.
Law, Sir A. J. (High Peak)
Southby, Commander Sir A. R. J.


Craven-Ellis, W.
Lees-Jones, J.
Spears, Brigadier-General E. L.


Critchley, A.
Leighton, Major B. E. P.
Stanley, Rt. Hon. Oliver (W'm'l'd)


Croft, Brig.-Gen. Sir H. Page
Levy, T.
Stewart, J. Henderson (Fife, E.)


Crooke, J. S.
Lewis, O.
Storey, S.


Cross, R. H.
Liddall, W. S.
Stourton, Major Hon. J. J.


Crowder, J. F. E.
Llewellin, Lieut. -Col. J. J.
Strauss, E. A. (Southwark, N.)


Cruddas, Col. B.
Lloyd, G. W.
Strauss, H. G. (Norwich)


Davies, Major Sir G. F. (Yeovil)
Loftus, P. C.
Strickland, Captain W. F.


Davison, Sir W. H.
Loval-Fraser, J. A.
Sueter, Rear-Admiral Sir M. F.


De Chair, S. S.
MacAndrew, Colonel Sir C. G.
Tasker, Sir R. I.


Denman, Hon. R. D.
MacDonald, Rt. Hon. J. R. (Scot. U.)
Tate, Mavis C.


Denville, Alfred
MacDonald, Rt. Hon. M. (Ross)
Taylor, Vice-Adm. E. A. (Padd., S.)


Doland, G. F.
Macdonald, Capt. P. (Isle of Wight)
Thomas, J. P. L.


Donner, P. W.
McEwen, Capt. J. H. F.
Thomson, Sir J. D. W.


Dower, Major A. V. G.
McKie, J. H.
Touche, G. C.


Drewe, C.
Maclay, Hon. J. P.
Tree, A. R. L. F.


Dugdale, Captain T. L.
Macnamara, Capt. J. R. J
Tufnell, Lieut. -Commander R. L.


Duggan, H. J.
Macquisten, F. A.
Wakefield, W. W.


Duncan, J. A. L.
Magnay, T,
Wallace, Capt. Rt. Hon. Euan


Eden, Rt. Hon. A.
Manningham-Buller, Sir M.
Ward, Lieut.-Col. Sir A. L. (Hull)


Edmondson, Major Sir J.
Margesson, Capt. Rt. Hon. H. D. R.
Wardlaw-Milne, Sir J. S.


Elliot, Rt. Hon. W. E.
Markham, S. F.
Warrender, Sir V.


Ellis, Sir G.
Mason, Lt. -Col. Hon. G. K. M.
Wayland, Sir W. A


Ellision, Capt. G. S.
Maxwell, Hon. S. A.
Wedderburn, H. J. S.


Elmley, Viscount
Mayhew, Lt.-Col. J.
Wickham, Lt.-Col. E. T. R.


Emery, J. F.
Meller, Sir J. S. P. (Tamworth)
Windsor-Clive, Lieut-Colonel G.


Emmott, C. E. G. C.
Mills, Sir F. (Leyton, E.)
Winterton, Rt. Hon. Earl


Emrys-Evans, P. V.
Mills, Major J. D. (Now Forest)
Withers, Sir J. J.


Erskine-Hill, A. G.
Mitchell, Sir W. Lane (Streatham)
Womersley, Sir W. J.


Findlay, Sir E.
Moore, Lieut.-Col. Sir T. C. R.
Wood, Hon. C. I. C.


Fremantle Sir F. E.
Moreing, A. C.
Wood, Rt. Hon. Sir Kingsley


Fyfe, D. P. M.
Morrison, G. A. (Soottish Univ's.)
Wragg, H.


Ganzoni, Sir J.
Morrison, Rt. Hon. W. S. (Cirencester)
Wright, Squadron-Leader J. A. C.


Gibson, Sir C. G. (Pudsey and Otloy)
Muirhead, Lt.-Col. A. J.



Gilmour, Lt.-Col. Rt. Hon. Sir J.
Munro, P.



Gluckstein, L. H.
Neven-Spence, Major B. H. H.
TELLERS FOR THE AYES. —


Gower, Sir R. V.
Nicholson, G. (Farnham)
Mr. James Stuart and Captain


Grattan-Doyle, Sir N.
O'Connor, Sir Terence J.
Waterhouse.




NOES


Acland, Rt. Hon. Sir F. Dyka
Bellenger, F. J,
Chater, D.


Adams, D. (Conselt)
Benn, Rt. Hon. W. W.
Cluse, W. S.


Adams, D. M. (Poplar, S.)
Bromfield, W.
Clynes, Rt. Hon. J. R.


Adamson, W. M,
Brown, C. (Mansfield)
Cove, W. G.


Alexander, Rt. Hon. A. V. (H'lsbr.)
Brown, Rt. Hon. J. (S. Ayrshire)
Daggar, G.


Amman, C. G.
Burke, W. A.
Dalton, H.


Barr, J.
Cape, T.
Davies, R. J. (Westhoughton)


Batey, J.
Charleton, H. C.
Davies, S. O. (Merthyr)







Day, H.
Lansbury, Rt. Hon. G.
Seely, Sir H. M.


Dunn, E. (Rother Valley)
Lathan, G.
Sexton. T. M.


Edc, J. C.
Leach, W.
Short, A.


Edwards, Sir C. (Bedwellty)
Lee, F.
Silkin, L.


Evans, E. (Univ. of Wales)
Leonard, W.
Silverman, S. S.


Fletcher, Lt. -Comdr. R. T. H.
Logan, D. G.
Sinclair, Rt. Hon. Sir A. (C'thn's)


Fool, D. M.
Lunn, W.
Smith, Ben (Rotherhithe)


Gallacher, W.
McEntee, V. La T.
Smith, E. (Stoke)


Gardner, B. W.
McGhee, H. G.
Smith, Rt. Hon. H. B. Lees. (K'ly)


Garro Jones, G M.
MacLaren, A.
Smith, T. (Normanton)


George, Megan Lloyd (Anglesey)
Mander, G. le M.
Sorensen, R. W.


Gibson, R. (Greenock)
Montague, F.
Stewart, W. J. (H'ght'n-le-Sp'ng)


Green, W. H. (Deptford)
Morrison, R. C. (Tottenham, N.)
Strauss, G. R. (Lambeth, N.)


Grenfell, D. R.
Noei-Baker, P. J.
Taylor, R. J. (Morpeth)


Griffith, F. Kingsley (M'ddl'sbro, W.)
Oliver, G. H.
Thorne, W.


Griffiths, G. A. (Hemsworth)
Owen, Major G.
Thurtle, E.


Griffiths, J. (Llanelly)
Parker, J.
Tinker, J. J.


Hall, G. H. (Aberdare)
Parkinson, J. A.
Viant, S. P.


Harris, Sir P. A.
Pethiok-Lawrence, Rt. Hon. F. W.
Walker, J.


Harvey, T. E. (Eng. Univ's.)
Price, M. P.
Watson, W. McL.


Handerson, A. (Kingswinford)
Pritt, D. N.
Wedgwood, Rt. Hon. J. C.


Henderson, J. (Ardwick)
Quibell, D. J. K.
Welsh, J. C.


Hills, A. (Pontefract)
Rathbone, Eleanor (English Univ's.)
Westwood, J.


Holdsworth, H.
Richards, R. (Wrexham)
White, H. Graham


Hopkin, D.
Ridley, G.
Wilkinson, Ellon


Jenkins, A. (Pontypool)
Riley, B.
Williams, D. (Swansea, E.)


Jenkins, Sir W. (Neath)
Ritson, J.
Williams, E. J. (Ogmore)


Johnston, Rt. Hon. T.
Roberts, Rt. Hon. F. O. (W. Brom.)
Williams, T. (Don Valley)


Jones, Sir H. Haydn (Merioneth)
Rothschild, J. A. de
Woods, G. S. (Finsbury)


Jones, Morgan (Caerphilly)
Rowson, G.
Young, Sir R. (Newton)


Kelly, W. T.
Salter, Dr. A. (Bermondsey)



Kennedy, Rt. Hon. T.
Sanders, W. S.
TELLERS FOR THE NOES—




Mr. Whiteley and Mr. Groves.

CLAUSE 2.—(Extension of period of stabilisation of rates of Imperial preference.)

4.26 p.m.

Mr. Wedgwood Benn: I beg to move, in page 2, line 16, to leave out "one year," and to insert "six months."
The Clause deals with the stabilisation of certain Imperial preferences for a period of 12 months, and the Amendment suggests that six months should be substituted for the 12 months. The understanding of this Clause involves a reference to other Acts of Parliament, and it is a pretty bad example of legislation by reference. The representative of the Board of Trade or the Chancellor of the Exchequer will correct me if I am wrong in my description of what this really is. In 1919 the first essays in Imperial preference were made. It was about the time that this country was giving a lead to the world in the race of economic nationalism, which we now so much deplore. [Interruption.] Certainly. In the Act of 1919 a preference of varying amounts was given to a large number of articles—tea, sugar, currants and so on—and also a preference was given in respect of duties under the Finance Act, 1915, commonly called the Safeguarding Duties, for motor cars, musical instruments, cinema films, and so on. In 1926 these preferences—and they are the preferences to which we refer in this Amendment—were fixed for a

period of 10 years. I believe that some minor adjustment was made in 1934 concerning coffee and tobacco, but this is irrelevant to my present purpose. In 1936, when the ten-year period expired, the duties were continued under Section 4 of the Act of last year for a further year. The position is that the preferences in the Second Schedule of the Act of 1919 on glucose, molasses and so, and also covering all the articles of the McKenna Duties, expire this year, and have to be continued for a further year. I hope that the Chancellor of the Exchequer will find that I have given a correct account of this part of the Bill.
The reason that I am moving that the period of six months should be substituted for the period of 12 months, is that a very considerable change has come over public opinion. We have always thought on this side that Imperial preference is exceptional and a mistake, but that some modification of the Imperial preferences is necessary has become widespread opinion among the Conservative party themselves. That some approach to the United States of America for the making of a trade agreement should be made, is being urged in very influential Conservative circles. If anything is to be done with regard to the conferences that are going on and which were inaugurated by Viscount Runciman when he visited the United States some time ago, obviously it would be a mistake


for this House to tie its hands for 12 months, which would mean probably that for that year no negotiations could be effectively carried on, because it would be assumed that the successful negotiation of a trade treaty with the United States would inevitably involve, with the consent of all parties, some modification of the Imperial preferences which exist at this moment. Therefore, we suggest that there should be a limit of these preferences to six months. Some of the articles which are the subject of preference, notably motor cars, cinema films and molasses, are articles which might very well be considered as part of any trade treaty made with the United States.
It will be interesting to note the reply of the Chancellor of the Exchequer or of the representative of the Board of Trade. It is commonly felt—Sir George Schuster said so in the "Times" not long ago—that we should take the lead in some wider trade arrangements with a view to the breaking down of this economic nationalism which is bound up with the political animosities afflicting the world to-day. For this purpose an approach must be made to the United States, and in any bargains that may be made the United States must have something in return for what they may give. Can that be done without affecting the principle of Imperial Preference? It is possible that that may be so, but in any case it is very foolish for us to tie our hands for 12 months with these preferences if in the meantime we are thinking of negotiating with the United States.
I shall be interested to know what the right hon. Member for Sparkbrook (Mr. Amery) thinks on this matter, because he has been the protagonist of Imperial Preference for many years. He seems to take the view that it is impossible to negotiate with the United States if that means touching Imperial Preference, because the principle of Imperial Preference must come first. He said in his letter, which was published yesterday:
If the policy of Imperial Preference is to succeed and bring about those results of Empire development and unity that we desire it must necessarily be in large measure by the diversion of Empire purchases from other countries, and perhaps most of all from the United States.
If that is the case, it is obvious that there is some sharp disharmony between the

principle of Imperial Preference and the principle of an Anglo-American trade agreement. Therefore, anyone who thinks of an Anglo-American trade agreement must be willing to modify or compromise his beliefs in Imperial Preference. It is because these considerations are very relevant to the state of affairs at this moment and that the continuation of these preferential duties for a year many hinder the chance of a trade agreement that we desire to reduce the period to six months.

4.35 p.m.

Mr. Amery: I had no intention of intervening in the Debate, but as my right hon. Friend has directly challenged me on this issue perhaps it might he as well if at this stage of the discussion a few words were said on the very important question which he has raised. There is not necessarily any fundamental disharmony between the policy of Imperial Preference and the policy of negotiating trade agreements with other countries, any more than there is a fundamental disharmony between the much further reaching policy of Imperial Preference which exists among various States of the United States of America and trade agreements between those United States and the outside world. Just as the development of internal trade and internal production within the United States of America comes first for American statesmen, so the development of inter-Empire trade comes first for us.

Mr. Benn: The particular passage in the right hon. Member's letter to which I referred was that passage in which he said that the development of Imperial Preference must necessarily be at the expense of purchases from the United States.

Mr. Amery: If my right hon. Friend will be a little patient I am coming to that point. I was referring first to the point that there is no essential disharmony between the policy of trade negotiations with the outside world and the policy of developing to the fullest that Imperial Preference to which some of us attach an importance that transcends its importance as a trading issue. It is not the desire of those who believe in Imperial Preference that we should set a Chinese wall around the British Empire and preclude trade with other countries. This country always wants to do a certain amount of trade with foreign countries, and so do Canada


and Australia. What we do say is that the trade within the Empire is not only more lucrative and paying to us as trade but is important in itself as a contribution to the general strength and development of the Empire which entirely transcends the purely economic issue.
It undoubtedly has paid us and it is bound to pay us in steadily increasing measure to buy from those who deliberately divert a greater portion of their purchases to us than to other countries. The larger proportion of whatever we spend within the Empire comes back to us in return purchases, and comes back to us also in the growing strength and prosperity of the communities whose prosperity we encourage and who in turn encourage us. That is the economic side. It is the cumulative trade which has been built up steadily year after year. Quite apart from that, there is this difference, that every million pounds spent on Empire trade strengthens those partners in the defence of our system of ordered freedom in the world who are the only partners we can look to in the present state of the world with any complete confidence, and the only ones who will spontaneously and instinctively rally to our side in any just cause.
It is, therefore, vital, wherever we can, within the limits of what is economically sound for each part of the Empire at any given time, to encourage the maximum development of Empire trade and to do so even if to some extent it involves the transfer of trade from other countries. It does not do so entirely. A very large part of the increased Empire trade since the Ottawa Agreement has been the measure of additional production within the Empire and not due to transfer from other countries. In so far as transfer from other countries is involved, that is their affair. Just as much as when the United States built up their tariff and their industries it was our affair to accept that situation. The United States have no reason to complain of any possible partial and temporary diminution of their exports to this country or of their exports to the Dominions that may result from our determination to trade as far as possible among ourselves. That does not in the least preclude the possibility of considering where and when, without damage either to existing preferences or without damage to our liberty to increase the preferences in the future, we

may see what room there is for mutual accommodation.
I would remind hon. Members that the American tariff is far higher than ours and that the balance of trade as between ourselves and America is very adverse. Before the great depression it was adverse to the extent of over £140,000,000 a year. It is now adverse to the extent of between £40,000,000 and £50,000,000 a year, and any agreement to be really satisfactory must be an agreement which does not accentuate that disparity but on the contrary tends to rectify it. If we can get concessions from the United States in return for the concessions we might make, that might be well worth doing, but actually the preferential margins that we give to the Empire to-day are so small that I regard it as absurd to suggest that they should be further reduced. If we can offer a preference to the United States in relation to goods that do not compete with Empire production, then let us negotiate. There is a very considerable range of American products with which the Empire is not in competition and which we could consider possibly in relation to our own industries, because they do not compete with our own trade. Let us negotiate with them there, and let us make it clear that they may have to be prepared to face substantial increases in our duties against them if they are not prepared to make reasonable concessions to us.
The aim of any agreement ought to be to bring about a better balance of trade between us and the United States and not to accentuate the disparity which at this moment and for many years past has been one of the chief causes of economic unbalancing and unrest in the world. The whole of the great depression was caused by the undue drain of the United States and by the fact that the United States having become a creditor nation was still determined to have a large favourable balance of trade. Of that favourable balance of trade the main authors were this country, because we were taking £140,000,000 worth of goods from the United States above what we sold to them, and Canada was taking £40,000,000 and Australia £28,000,000. If in the years after the War we had had an effective preferential system in the Empire and the Empire had taken substantially less from the United States, that adverse balance would not have


been as serious as it was and the whole of the circumstances creating the great depression might never have happened. People talk to-day about going back to the Gold Standard and the necessity of having a balanced system of trade in the world. That is impossible so long as the greatest creditor nation, the United States, is forcing its exports on the world and not taking a proper amount of imports in return. Therefore, the extension of Imperial Preference, even if it reduces the total of American exports, will be a contribution towards that more harmonious balancing of world trade which will create conditions under which the present restrictions in the world may be somewhat reduced.
The right hon. Member made the underlying assumption that in agreement with the United States at the expense of Imperial Preference is going to affect the economic nationalism of the world outside. There is not the remotest chance of anything of that sort happening. The economic nationalism of the world outside was not created by Imperial Preference. The whole system of quotas, restrictions and steeply-raised tariffs, raised in the time of the great depression, preceded our tariff and preceded the Ottawa negotiations, and at a much higher and far more drastic level. We, throughout, have had that absence of mutual restriction which has only just been brought about by a small group of States known as the Oslo States, after their recent conference. Our comparatively small example of economic nationalism has certainly not been responsible either for the high tariffs or the quotas and exchange restrictions of other countries. It really has not had the slighest influence on the situation.
After all, these countries are set upon their present policy not as a mere fad or aberration and not merely for military purposes, although they play in many cases a considerable part. They pursue their policy because they believe that to control and regulate their own economic system is an essential part of their organised national life, essential not only for their security and their standards of living and for their social services, but essential also for having a balance within their own communities to protect them against the fluctuations in the world outside. Italy and Germany

are convinced that they must pursue a policy of economic nationalism while Russia is obviously the victim of a policy which is entirely incompatible with any kind of conception of international cooperation, and France realises that a rise in wages and shorter hours cannot be obtained without international agreement. For all these reasons, while we may make concessions to the United States to the injury of our own trade and our Imperial Preferences, it would not have the slightest effect on the situation in the world at large. I hope the Chancellor of the Exchequer will not pay too much heed to the appeal of the right hon. Gentleman, whose consistency I have always admired.

Mr. Benn: Before the right hon. Gentleman concludes his very interesting speech will he reply to the specific point I put, and which he points out in his letter; that the success of Imperial Preference involves the diversion of our trade from other countries and perhaps most of all from the United States? That is a simple question to which we have had no reply.

Mr. Amery: I think that in a large measure the result of Imperial Preference would be to create new sources of world trade without affecting the Ottawa Agreements, and it would, and does, involve some transfer of trade from other countries for the time being and most of all perhaps from the United States. But as a consequence of that policy the total strength and wealth of the Empire would be developed and the actual total trade of America with the Empire would continue and might increase.

4.48 p.m.

The Chancellor of the Exchequer (Sir John Simon): In my view the Amendment raises an exceedingly narrow point and only a short answer is required. The right hon. Gentleman proposes to substitute six months for one year, and has advanced an argument which he thought would support the proposal. The discussion which he has raised may not develop if the limited question raised by the Amendment is pointed out. What happens if we substitute six months for one year in the Clause? The result would not be to reduce any tariff upon any foreign goods at all. The tariff on foreign goods will remain exactly the


same in so far as anyone wants to reduce the tariff on imported goods it would not be effected by the Amendment. As far as Dominion products are concerned the application of this Clause would in practice be limited to sugar, silk, artificial silk, clocks and musical instruments. That is all. Other articles are all covered by other provisions. Consequently that is the full range of the Clause. What would happen as regards sugar, silk, artificial silk, clocks and musical instruments, if the Amendment was adopted? It would not affect the tariff on foreign goods coming from abroad. The only result would be that after six months the tariff on these things, if they come from Dominion sources would be raised; it would be bigger than it otherwise would be. I cannot think that anyone who is disposed to reduce tariffs can find any great satisfaction in an Amendment to secure that in six months the tariff on these articles, if they come from the Dominions, would be raised, but that is the actual effect of the Amendment. It is suggested that six months is long enough to give time for negotiations with the Dominions or the United States.

The Deputy-Chairman: Do I understand that the effect of this Amendment, if carried, would be to increase the duties on certain articles imported into this country for the latter part of the financial year?

Sir J. Simon: Yes.

The Deputy-Chairman: Then the Amendment is out of order.

Mr. Benn: May I point out that when these preferences were originally granted in 1919 we moved, and the right hon. Gentleman was prominent in the matter, that the Schedules should not be part of the Bill and we were allowed to debate it? If the whole question of preferences is ruled out of order it limits the powers of this Committee and goes far beyond any Ruling which your predecessors have given.

The Deputy-Chairman: The right hon. Gentleman forgets that since those days there has been passed the Import Duties Act, which automatically puts duties on things coming into this country, and if the effect of the Amendment is to raise the duties I am afraid I have no option but to rule it out of order.

Mr. Benn: Do I understand, therefore, that all Amendments dealing with the removal of Imperial Preference would be out of order?

The Deputy-Chairman: I do not go so far as that, but if in this specific case the effect of the Amendment will be to bring in a higher rate of duties then it will increase the charge, and is out of order.

Mr. Benn: Does your Ruling mean that if an article is removed from this Clause and thrown into the general class any Motion to remove the preference which results in an increased duty is, therefore, out of order? Would not that apply to any Motion against any preference, and is it not a very wide Ruling? May I direct your attention to the fact that this class of article is not subject to a common tariff. They were first given a preference in 1919, and I submit that the Debate should be allowed to proceed; otherwise the power of this Committee on most important matters of principle and policy is very much handicapped.

Mr. Pethick-Lawrence: I can fully understand that in the existing state of the law some Amendments might be moved which would increase the duty, but that is not the case here. We are not making any increase on the existing law. It is the Bill which is making the alteration, and the proposal of the Amendment is merely to modify the proposal in the Bill. In those circumstances I would suggest that it is open to us to modify the proposals of the Bill if we keep to the state of the present law.

Mr. Amery: It is open to the right hon. Gentleman to move the Amendment in the form of a reduction of the main duties.

Mr. Benn: May I submit that under your Ruling it would be out of order for us to vote against the Clause? If we vote against the Clause and it is rejected we shall be increasing the charge. I should like to know whether we shall be in order in voting against the Clause, seeing that it involves a charge? Do you propose to put the Clause to the Committee?

The Deputy-Chairman: Most certainly. I have known several cases where an Amendment has been out of order but the Committee has discussed and voted against the Clause. Although it may


seem extremely illogical there is no doubt about the accuracy of that. If the Amendment is withdrawn I shall rule that the discussion may continue on the Motion of the Clause standing part. It is a very complicated Clause, and it was not until I heard the Debate that any doubt arose in my mind. I should be very sorry to rule offhand whether in point of fact if the Clause is amended it would increase the charge. I understand that the Clause in effect makes a reduction of the existing rate of duty, and that if the Clause is not amended any articles would be under the duty. So long as an Amendment does not bring the duty beyond the rate imposed in other Statutes it is in order. The difficulty I am in—and here perhaps the Chancellor of the Exchequer can help me—is precisely what is the effect of the Amendment. I did not anticipate this point arising and therefore I have not looked it up. My difficulty is to be exactly aware of how this will work in connection with other Acts.

Mr. Pethick-Lawrence: May I suggest that as you yourself say, this is a point of some difficulty and that you would like to give further consideration to it, you do not give a final decision now on the general issue, but that we should debate the matter on the Clause standing part and leave the matter as it were in the air for you to consider it and give a considered judgment?

Sir J. Simon: As the Deputy-Chairman has appealed to me, perhaps I had better say what I understand the position to be. I did not take the point as an objection to the Amendment. The Clause is rather complicated. It goes in, as it were, and then comes out, and it is difficult to be sure what is the right reading. But if hon. Members will look at the Clause again they will see that the proposal of the Government is that Section 7 of the Finance Act, 1926, which as things stand would only leave certain Imperial preference rates stabilised down to the 19th August next, shall be extended to 19th August, 1938. If I may say so, the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) is right when he says that it is the Clause itself which extends the preference.
I think the observation I was making, which I did not make with any desire to

create trouble, was correct. Supposing that the Committee accepted the right hon. Gentleman's Amendment and struck out "one year" and substituted "six months," the effect would be that Section 7 of the Finance Act, 1926, which, as things stand, comes to an end on 19th August, would be carried on until 19th February, 1938. I pointed out that if that were the case, for example, sugar, which is imported from the Dominions, would enjoy the preference which Section 7 prescribes—which is a substantial preference—for six months, but that after the six months were over, would enjoy a smaller preference because there would then begin what I will call the intermediate tariff. The question for you, Sir, is simply whether in those circumstances the Amendment is out of order. I wish to point out that it is not the fact that the law of the land as it stands at this moment confers this preference either down to next February or down to August, 1938; it confers the preference down to 19th August only, and it is the provision of the Bill which would carry it for another 12 months or, if the right hon. Gentleman had his way, another six months.

5.2 p.m.

Mr. Benn: Further to the point of Order, I am extremely anxious that a Ruling on the very important question of our right to debate Imperial preference should be, as you were good enough to suggest, a considered Ruling by you, and in those circumstances, may I ask leave to withdraw the Amendment in order that you may have an opportunity of giving a considered judgment on the point of Order and that the Debate may continue, in accordance with what you said, on the question that the Clause stand part?

The Deputy-Chairman: If the right hon. Gentleman would be good enough to take that course, it would be for the convenience of everybody. The point raised by the hon. Member for East Edinburgh (Mr. Pethick-Lawrence) is obviously one of very considerable intricacy on this particular occasion. I have no desire to prevent the Committee from debating Imperial preference, and there is no doubt that it would be in order to do so on the Question that the Clause stand part, but I would not like to commit myself as to the exact effect of this Clause or of an Amendment to it which might impose a duty not


authorised by existing legislation or which might merely prevent the reduction of a duty imposed by legislation, without having a further opportunity of considering this very intricate Clause. As the right hon. Gentleman said, this is legislation by reference, and it will mean going back to the original Statutes.

Mr. Benn: I understand that the issue which was raised is suspended for the moment, and I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

5.5 p.m.

Mr. Lees-Smith: I rise to ask the Chancellor of the Exchequer whether he will now continue the statement which he was making in reply to my right hon. Friend. The point raised by my right hon. Friend was that the Government are engaged in discussions with the United States and that they appear to be committing themselves to certain things. The Chancellor of the Exchequer was dealing with that general argument and certain wider aspects of the question.

5.6 p.m.

Sir J. Simon: I think hon. Members have already been informed that the discussions with the United States are in an informal and exploratory stage. No advantage is gained by exaggerating or headlining matters beyond what are at present the facts, and one cannot help the discussions by so doing. As hon. Members were informed the other day, it is a fact that there is informal and exploratory work being done really to determine whether a basis can be found for trade negotiations with the United States. That is the stage which the matter has reached. Hon. Members were told that we have kept the Dominions informed of what is going on. Fortunately some of their representatives are in this country and naturally it is easy for us to do so, but we should do so in any case. In the view of the Government there is no reason for believing that matters would he facilitated by a limitation such as was suggested in the Amendment. It is most desirable that these negotiations and all others leading towards freer and more general exchange should be conducted in the right atmosphere, but we shall not do it by failing to recognise that there is

a vast deal to be discussed. The Dominions are kept informed of anything which is under consideration.
I shall certainly not undertake to make any further statement, and I do not see in the fact that these conversations have been started any reason for not accepting the provisions of Clause 2, which on other grounds are entirely necessary, because unless we carry the situation on for a certain period further, we shall, among other things, run the risk of having to come back and ask for further authority for another few months, and it is very much better on every ground that we should extend the existing arrangement for another year. I would point out further that in the Canadian agreement, which is the one which has been negotiated, while discussions with other Dominions are in progress, or will shortly be in progress, there is an article—Article 16—which shows the spirit in which the whole thing is being handled. Hon. Members will find that article set out on page 39 of the Finance Bill, and it reads:
In the event of circumstances arising which in the judgment of the Government of the United Kingdom or of the Government of Canada, as the case may be, necessitate a variation in the terms of this Agreement, the proposal to vary those terms shall be the subject of consultation between the two Governments.
In pursuing a policy, which I think has the warm support of the great mass of opinion in this country, of seeing whether we are able in this matter or in that to find an opportunity for improved trade relations with the United States, it is really a mistake to suppose that we are choosing between light and dark, or between black and white, or anything of that sort. The whole thing has in course of time to be set together, and the spirit in which it is sought to do that is to be found in Article 16. That is the answer to those who challenge Clause 2. It is plainly right, in the circumstances, to continue the stabilisation of the rates of Imperial Preference for another 12 months, for it is by that means that we secure the necessary period for the negotiations with the Dominions, one of which has been completed and others of which are taking place.

5.10 p.m.

Mr. Graham White: I listened with interest and respect to the observations of the right hon. Gentleman the Chancellor


of the Exchequer with regard to the negotiations which are proceeding with the United States of America and also to his statement that he does not think any very useful purpose would be served by rejecting this Clause. There is, however, one consideration which may not have received as much attention from him as the other points which he raised. There is no doubt that the changed attitude of the United States, which in the past was one of the biggest sinners in the matter of high tariffs, towards the general question of international trade is one of profound importance. The political mood of the United States at the moment is one of anxiety to enter into general trading agreements in the world for the purposes of building the basis of a sound peace.
As the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) pointed out, that is not necessarily opposed in the full degree to the measure of Imperial Preference which he has advocated for so long and with such ultimate success, for the United States is not one of those countries which challenge the principle of Imperial Preference. There is every reason to suppose that with the good will of Canada, the United States and ourselves there might be a most important development in the tripartite trade between the three countries. There is nothing which could be of more importance—and in saying that I have no wish unduly to headline the matter—than that these proposals and the improved atmosphere in the United States should be seized and held on to. The point raised by my right hon. Friend is really one of time. In a way it is unfortunate that the mission of M. van Zeeland, which I am pleased to see the Government have taken the initiative in supporting, should not have got all its facts and the difficulties which it may bring to light together in time to place them before our colleagues from the Dominions for their consideration. Time is a very important factor, and it would have been of great advantage to this new movement for trade and peace if the information and difficulties which the mission of M. van Zeeland may bring to light could have been brought to the knowledge of the Imperial Conference.
The point with regard to the United States is that the present opportunity should be seized, for it may not last for

ever. The United States Congress, like the English Parliament, sometimes changes its mind, and it is of importance that something should be done now to show the United States and other countries that the Dominions and Great Britain wish to preserve the greatest possible freedom of action and freedom of manoeuvre in any negotiations which may develop. We may be on the eve of an entirely new economic and political development in the world, and the importance of handling it aright at the outset is of the utmost consequence to the future of mankind. Therefore, I submit to the right hon. Gentleman the Chancellor of the Exchequer that to free our hands for a period of six months would be a fact which, perhaps more than anything else, would convey to the people of the United States evidence that this country means business. It must be admitted by all who are conversant with American opinion at the present time that there is a feeling in that country—I do not pretend to say whether it is justified or right—that all the impetus towards peace and economic appeasement is coming from the United States and that in London the opposite is to be found.
It is very important that that feeling should be dispelled. During the last 18 months a change has come over world opinion with regard to international trade. The right hon. Gentleman the Member for Sparkbrook (Mr. Amery) referred to conditions in Germany and to the strong line which had been taken by that country, but I submit that one of the most remarkable things in the last two months has been the definite declaration of Dr. Shacht that they had pursued that policy only to their own detriment, and that they were willing to pursue another policy if opportunity arose. I seem to remember, too, that following the visit paid to Berlin by the right hon. Gentleman the Member for Bow and Bromley (Mr. Lansbury) the Vice-Chancellor of Germany made a somewhat similar observation. We know the change which has taken place in other quarters. We welcome, above all, the reception by our Dominions of the change in principle, which is, I think, of profound importance.
During the depression the whole trading world was on the defensive. They were obliged to take what measures they could to save what could be saved from the wreck. Since then equilibrium has


been established between supply and demand and that has had the effect of removing many of the fears and anxieties which troubled the trading world. The situation is better in that respect. What we want to do now is to show that, in these negotiations which we hope will proceed successfully, our hands are free, and that we are determined not to be bound by a little England policy or by a little Empire policy. I know that the right hon. Gentleman the Member for Sparkbrook never advocated setting up a Chinese wall, but he has indicated certain limitations. What he has advocated has been "a certain measure of trade" with the outside world. Let us do all the trade we can. That is what our distressed areas and our seaports are calling for. Let us not limit it to "a certain measure." Let us not put any limit to our ambition as to the amount of trade which we wish to do. I suggest that it is important that we should make clear, as I say, that our hands are not tied. Let us proceed, not solely on the basis of our own special advantage and special interests, without regard to the welfare of the rest of the world but on the principle that we have primarily in mind the welfare of trading throughout the whole world, and endeavour to fit our own policies into that scheme.

5.19 p.m.

Sir Edward Grigg: I am not disposed to under-rate the importance of an understanding on economic questions between this country and the United States, and I hope that such an understanding may be possible in the near future, although, in my opinion, it is more likely to be practicable and useful in the region of exchange and currency than in the region of tariffs. But I deprecate the line which has been taken by the hon. Member for East Birkenhead (Mr. Graham White) in regard to the continuance of this preference. He asks us to make a gesture. At whose expense are we to make it? I believe that this Clause continues the important duty on sugar. It must, therefore, be of considerable concern to the West Indies colonies which have suffered much from changes in our fiscal policy in the past, and have been subjected to what is, I think, unnecessary competition by the encouragement of sugar-growing in this island. Those colonies are, therefore, deserving of special consideration. To say that they should be penalised in

order that we might make a gesture, which would not carry the least weight or make the slightest impression in Washington, seems to show an utter disregard of the responsibility which the House of Commons has, in the first place, towards our fellow-subjects within the British Commonwealth. Further, the worst thing for business and trade is uncertainty. Even a year is not a very long time but to say to people who are doing important business that they can only rely on certain preferences for the extremely limited period of six months, would be to do them still further injury. I hope, therefore, that no attention will be paid to the arguments which have been addressed to the Committee this afternoon from the benches behind me.

5.22 p.m.

Mr. Bellenger: We have listened this afternoon to two expositions of the vital principle involved in this proposal. One was by the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) who gave us the classical exposition of the case for Imperial Preference which was to be expected from him. The other was from the Chancellor of the Exchequer, and I was interested to note the variance which appears to exist between the views of the Chancellor of the Exchequer and those of the right hon. Gentleman the Member for Sparkbrook. We know where the right hon. Gentleman the Member for Sparkbrook stands. He wants Imperial Preference and as much of it as he can get. But can we be certain that the Chancellor of the Exchequer holds the same view? I do not know what the Committee think about it. I may be dense but I was not able to extract from the Chancellor's speech a clear indication of where the Government stand in relation to this question, and this Debate will have served a useful purpose if we succeed in eliciting from the Government a statement of their trade policy in relation both to Imperial Preference and to international trade in general. Perhaps the Chancellor of the Exchequer, in view of his distinguished past, felt that he was skating on thin ice. We can sympathise with him in the position in which he is placed by this Debate, but I think it is only fair to his own supporters and the country, that we should have an indication of where he stands and where the Government stand on this question.
The right hon. Gentleman the Member for Sparkbrook holds theories which are, I suggest, somewhat out of date. The ideas which he has expressed this afternoon may have been suitable, I suggest, to the nineteenth century but they are not suitable to present world conditions. He suggested that the economic policies which Germany, Italy and Russia are pursuing to-day were not temporary aberrations. I seem to have read somewhere that the policy of autarchy which is being pursued by those countries has been said by their statesmen to be the direct result of the policy which the British Empire has followed in the last few years. I have on several occasions heard a right hon. Gentleman who, I understand, took his seat in another place this afternoon, lamenting this policy. If that is a sincere expression of Government opinion, ought we not to do something to prevent these economic policies being further pursued? On the Government's own admission they are disastrous to the future of the world and of civilisation. I welcome all the Empire trade we can get. I would increase it as much as I could, but if that is to be done at the cost of our whole foreign trade, it is not going to be of much use to the community of which we are proud of being members.
We listen almost daily to lamentable tales of the gradual decline in numbers of this wonderful race of ours. What is to happen in the days to come if we continue to pursue this Empire policy which we are pursuing to-day, with a gradually declining population against virile nations like Germany and Italy with their systems of autarchy? Does the right hon. Gentleman the Member for Sparkbrook think that it will be possible in those circumstances to develop our Empire in the future as we have done in the past? I do not think it possible on the lines that he has laid down. We must face the facts. It is no good contenting ourselves with theories, even if they come from such eminent persons as the right hon. Gentleman. The facts are that our trade, both Imperial and foreign, has been steadily deteriorating for several years past. The Committee will allow me to give some figures in support of that view. Imports of merchandise from British countries between 1924 and 1935 have been re-

duced by £101,000,000, and imports from foreign sources by £419,000,000. Exports and re-exports to British countries have been reduced by £144,000,000 and exports and re-exports to foreign countries by £314,000,000.

Sir H. Croft: Will the hon. Member give the figures for 1931?

The Deputy-Chairman: I think the hon. Member is getting rather beyond the subject under discussion. This is not a very wide Clause, but it has led to a very wide argument. If the hon. Member starts giving the figures of trade over the last 20 years we shall find ourselves getting into a Board of Trade debate.

Mr. Bellenger: I only gave those figures in passing to substantiate the argument which I was submitting to the Committee, I do not wish to dwell unduly on that aspect of the situation. I think the Committee realise that while our Imperial trade has increased to a certain extent during the last few years under the Ottawa Agreements, our foreign trade, though not necessarily affected by those agreements, has not been increased to the extent to which it might have been increased if we had had better understandings with foreign nations. We are not asking that our Empire trade should be thrown away. We are anxious to keep as much of that trade as we can, but we are also anxious to increase our international trade on which in the last century the prosperity of this country and of the British Empire was based. It would be interesting this afternoon if we could ascertain definitely the Government's policy, because, after all, they have the ball at their feet.
The right hon. Gentleman the Chancellor of the Exchequer referred to Article 16 of the Canadian Treaty which I think can be intepreted in this fashion. It is evident that Canada and the British Government anticipate that some of these Imperial preferences will be affected—whether in next year or in the next six months I do not know—by agreements which may be made between this country and the United States of America. I do not know whether the Government accept any responsibility for the statements made by their Ambassadors abroad, but our Ambassador in the United States of


America also is anticipating something happening in the way of a trade agreement between this country and the United States. If that be so, is it possible for us to get that agreement and at the same time retain all these Imperial preferences, and even increase them, as no doubt the right hon. Gentleman the Member for Sparkbrook himself would like to do?
There were two very interesting contributions to the "Times" on a recent date. One was a letter from the right hon. Gentleman the Member for Sparkbrook, stating a case, as I thought, in a very narrow way, and the other was an article by Sir George Schuster, called "Home thoughts from America," and, stating, as the happy headline put it, that there was "an opportunity to be seized." I thought the article written by Sir George Schuster did open up possibilities of a wide understanding between this country and foreign countries in general which would lead eventually to an increase in our foreign trade. I conclude by saying that I should have thought hon. Members opposite would have been glad if the foreign trade of this country could be considerably increased. They know that markets have been narrowing for years and that the volume of trade has lessened. To-day, as Sir George Schuster says, what we have to concern ourselves with is not to make sure of the markets that we hold by the skin of our teeth, but we have to ensure that markets shall be increased, that opportunities shall be increased, and I suggest that that will only come about when we have an entirely different economic system in this country. Therefore, I am glad to take part in this Debate for a short time because I believe that this whole question of Imperial preference will have to be faced by the Government, whether it is in 12 months' or in six months' time.

5.33 p.m.

Colonel Ropner: The Chancellor of the Exchequer has been asked during the last few minutes to explain the Government's policy with regard to preference. I do not want to anticipate the reply that I hope the Chancellor of the Exchequer will give, but I thought that by now the whole country would have appreciated the fact that it is the policy of the Government to maintain, first, our home trade, second, our Empire trade and,

third, the trade of the rest of the world; and for my part I can see no inherent contradiction in giving an order of preference to the trades which we wish to encourage. The phrase "Empire preference" means to me something a great deal more than a mere matter of trade. There are two considerations, Empire unity, which has been referred to by the right hon. Member for Sparkbrook (Mr. Amery), and Empire emigration, which I hope will become important features of Dominion policy in the next few years and which far transcend in their importance the question of trade.
I did not intend to intervene in this Debate, but I rose primarily to express my regret that the hon. Member for East Birkenhead (Mr. White) should have made the speech which he did. He said he hoped the Government would make it clear beyond any shadow of doubt that their hands were free, and he hoped the Government would not adopt a "little England" or a "little Empire" policy. I wonder what sort of impression is made in the Dominions when remarks of that sort are repeated. I cannot believe that anything other than harm is done, and I hope the Government will make it quite clear that they are still loyal to the principle of Empire preference.

5.36 p.m.

Mr. Ridley: I have no desire unduly to prolong the Debate on this Clause and would gladly have yielded to a Member of the Treasury Bench if one had desired to rise to satisfy our desire for a more adequate explanation of the Government's policy in this matter. But may I submit, with some deference to so experienced a Member of this House as the right hon. Member for Sparkbrook (Mr. Amery) that we are much more easily inclined to see a Chinese wall in the other man's eye than we are in our own. In the field of international economics as well as in the field of international armaments, many of us are disposed to pretend that we in fact are the inoffensive people, that we hold the instruments of defence, and that the instruments of offence, in trade warfare, are in other people's hands. The hon. Member for Altrincham (Sir E. Grigg) asked at whose expense a gesture was to be made. If a gesture is not to be made of some kind, the world is not to be led back to that kind of economic happiness that every world economist


knows cannot come out of economic nationalism. I say, with every courtesy to the last speaker, that his order of priorities is a very easy one to catalogue—home trade, Empire trade, and then at the end of that the rest of the world—but everybody in the world, every economist and every statesman in the world, knows that it is the cataloguing of priorities in that order which leads to the kind of economic restriction that defeats to-day every attempt to re-establish world trade and international commerce.

Sir E. Grigg: How does the hon. Member reconcile that argument with the speeches which so often come from those benches regarding the trusteeship and the paramountcy of native interests?

Mr. Ridley: To attempt to answer that question would only confuse the argument which I am putting to the Committee. I would like to ask the right hon. Gentleman the Chancellor of the Exchequer whether he can find it possible to leave the narrow ground on which he based his earlier reply in order to let the Committee know what the Government's policy really is in relation to these matters of Imperial preference. I, along with my hon. Friend the Member for Bassetlaw (Mr. Bellenger), detected some uncomfortability in the speech of the right hon. Gentleman, and I was not surprised. I took an opportunity a little earlier in the day of reading the Debate on the Finance Bill of 1926, and it was then, I discovered, that the right hon. Gentleman opposed safeguarding duties as well as Imperial preference duties and that he lived for the day when he hoped a Chancellor of the Exchequer would come to this House who would denounce the latter both as being illegal and invalid. He also said, addressing the then Chancellor of the Exchequer:
I wish I had the tongue of the Chancellor when in the old days he was denouncing such proposals.

Sir J. Simon: Who was that?

Mr. Ridley: It was on the Finance Bill of 1926. The right hon. Member for Epping (Mr. Churchill) was then Chancellor of the Exchequer, and the present Chancellor then occupied a position of greater freedom and less responsibility. Bernard Shaw once, referring to Lord Rosebery, said that he never missed a

chance of losing an opportunity. The right hon. Gentleman has that distinction to-day. May I ask the right hon. Gentleman what really are the Government's intentions in this matter? First, there are 10 years, and then a further year in order that discussions might be proceeded with and it is supposed that some other arrangements might be considered. Then presumably another year for the same sort of vague, unspecified, and undefined purpose. If the purpose can be more clearly defined, may we know what sort of arrangements may be anticipated in the next 12 months, whether the Imperial preference duties are permanent, and, if so, why the proposal is not for another 10 years instead of only one year; whether they are temporary and, if temporary, in what circumstances or conditions they will be either abrogated or modified? It is surely not beyond the wit of an ordinary man, and certainly not beyond the wit of the Chancellor of the Exchequer, to give replies to those questions, as clear as I hope the questions themselves have been. In other words, may I, more seriously, inquire what is the Government's general desire and intention in relation to trade?
Is it their desire, for instance, to maintain the present Imperial preference conditions without regard to world trade, or is it their desire to use the existing Imperial preference conditions in order to negotiate agreements in the wider field of world trade, that under certain happier circumstances might justify them in regarding the present Imperial preference arrangements as being only temporary? In fact, do the Government desire to lead to a deeper and more accentuated economic nationalism, or to take the bold course of leading to what every economist in the world and every far-seeing statesman in the world knows it must lead if economic happiness is to return to the world? Do the Government desire to make some gesture, to take some lead, that will give the world a hope that this country in economic affairs, as well as—as was at one time the case—in international affairs, shall really give the world the lead that the world is now hungering for? The world needs to be a freer trade world, and the right hon. Gentleman knows that probably better than most other people in this House for he has said it more often. The world must be free


from those tariff barriers that bind economic nationalisms on Europe and throughout the rest of the world. It must be free from them if international trade and commerce are to flow again as freely as they did 15 years ago, if prosperity is to return to the world, and if disastrous consequences are to be avoided. I press the right hon. Gentleman for some more adequate and wider statement about the Government's policy than has so far been given to the Committee.

5.43 p.m.

The President of the Board of Trade (Mr. Oliver Stanley): I hope that the hon. Member who has just sat down will not mind that the appeal which he has made is responded to by an ordinary man and not by the Chancellor of the Exchequer, but he has assured me that the task is one that can be performed with but a modicum of wisdom. The Debate to which we have listened has been conducted in a fashion which would usually give to those who would have to answer from the Treasury Bench the greatest possible satisfaction. That is to say, on one side arguments have been advanced with great force and clarity which have immediately been destroyed, with equal force and even greater clarity, by the other, and while one set of hon. Members has been laying on for Rome, another set of hon. Members has been laying on for Tuscany.
I want to intervene only for a very few moments in this Debate, because I should very much regret it if the Debate left the impression, in connection with these matters round which so much of the discussion has centred, that is to say, the possibility of any agreement with America, that there is an antithesis between the principle of Imperial Preference and the possibility of an agreement with America. I do not believe that that antithesis exists. My hon. Friend the Member for Altrincham (Sir E. Grigg), a well known exponent of the principles of Imperial Preference, is only too glad to prove the advantages which might come not only in the trade, but in the economic sphere, from an agreement. On the other hand, my hon. Friend the Member for East Birkenhead (Mr. White) when he urges the claims of a possible agreement with America, is careful to make it plain that he does not on that account urge the destruction of Imperial Preference.
I do not think it has ever been claimed by anyone that agreement with other countries necessarily impinges upon, far less is destructive of, the policy of Imperial Preference which we have built up. That has certainly never been claimed by the United States of America. If it had been the desire of the United States of America to use any discussions for a possible treaty with us to destroy the principle of Imperial Preference, it would of course have been impossible for us to give any answer but a negative one. That has never been the attitude taken up by them. They have never expressed any desire to see us abandon the principle we have adopted, and they believe, as I believe, that there is in fact no antithesis at all between the two.
An hon. Member opposite, in his attack upon the principle of Imperial Preference, started to quote some figures which you, Captain Bourne, stopped in the middle, and therefore I cannot refute them. I would, however, suggest to the hon. Member that it is not a very good argument against the policy of Imperial Preference, and it does not give to those who listen a very good idea of the strength of the argument against it, when, in order to attack that policy, you have to quote figures of a decline in world and Imperial trade choosing as your datum year a year eight years ago before this principle of Imperial Preference was put into effect. I would remind hon. Members opposite that, whatever may be the changed conditions of the world to-day, however more favourable to expanding world trade may be the circumstances that we see in 1937, the position of world trade as they left it in 1931 was very different, and there were many people in this country who in 1932 were glad to see emerging from the wreckage of world trade a measure of stability which had been created by the policy of Imperial Preference.

Mr. Bellenger: As the right hon. Gentleman queried certain figures I used as being out-of-date, may I ask whether this Clause does not deal with Imperial Preferences which were set up in 1919?

Mr. Stanley: I did not think the hon. Member would take a point as small as that. He knows that the Clause deals with three small items of Imperial Preference, and he, I naturally assumed, was arguing on the wider basis of those


further preferences which were granted as the result of the Ottawa Agreements.
I was sorry to hear the hon. Member for East Birkenhead say that the feeling in the United States was that all the impetus was coming from them, and that all the obstacles were in London. I hope that that is not the feeling. If it is, it is a feeling which has no justification. I believe that the whole Committee and the whole country, certainly His Majesty's Government, are anxious that we should in these exploratory conversations find some basis for negotiations, and that if the negotiations take place we shall find a solid basis for success. I cannot believe that in order to assure the American people of our desire in that matter we have to go beyond a plain statement of His Majesty's Government's intentions and, that in order to assure them of our intentions, we have to make to them a gesture entirely at the expense of someone else. It has not even been claimed that the particular items on which we are to make a gesture are ones in which the United States have any interest. I cannot believe that we could make a gesture in a matter of this kind which would be useful for the further expansion both of world and of Imperial trade. I think that would be a gesture which shows that what we desired was not expansion but diversion. We do not want by any agreement merely to divert trade between America and ourselves which at present exists between ourselves and the Empire.

Mr. Benn: Will the right hon. Gentleman explain that to the right hon. Member for Sparkbrook (Mr. Amery)?

Mr. Stanley: The right hon. Gentleman the Member for Sparkbrook has a long reputation for knowledge, experience and acumen on this subject, and I doubt whether further explanation would be required. May I make an appeal to hon. Members? We do hope that it might be possible, if great practical difficulties are overcome, if negotiations can be begun, if agreement can be arrived at, that in such an agreement it would not only be ourselves and the United States, but it would be the Empire and the world as a whole which would find solid advantages in expanding trade. That is, I believe, the desire most of all of Members of this House.

They realise that there lies before us a period of intricate, patient and difficult preparation. Obstacles of various kinds have to be removed. Hon. Members will, I am sure, do nothing that will make more difficult the removal of those difficulties and the attainment of an object which all have in view, namely, the improvement and security of British trade.

5.52 p.m.

Sir Archibald Sinclair: I did not intend to speak in the discussion which has followed the interesting speech of my right hon. Friend the Member for Gorton (Mr. Benn) until the speech of the President of the Board of Trade, which calls for some reply. The right hon. Gentleman said that some hon. Members had struck for Rome and some for Tuscany. He, obviously, belongs more to Laodicea. The Government have pursued in this Debate the policy, which they have pursued over every field, of blurring the edges of every controversy. The right hon. Gentleman the President of the Board of Trade at the end of his speech spoke of all Members agreeing on the desirability of making some agreement with the United States for the expansion of trade. He knows perfectly well, as every other Member of the Committee knows, that there have been great meetings of Government supporters upstairs denouncing the whole policy and saying that it is a threat to the principle of Preference—it is no use the right hon. Gentleman shaking his head. Anybody who has read the "Times" knows that there has been a meeting of the Empire Industries Parliamentary Committee upstairs drawing attention to the danger of the policy which the right hon. Gentleman is believed to he carrying out.
There is a real difference of principle, and I was delighted to read that masterly letter which the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) wrote to the "Times" yesterday. I was delighted to see the case—with which I do not agree—put with honesty and clarity, and in such a way as to raise an issue on which public opinion ought to be educated. The speeches we hear from the Front Government Bench blur all these issues. They bewilder public opinion in this country, and I am glad we have had this Debate in which we have had some of these issues clearly and genuinely argued.
My hon. Friend the Member for East Birkenhead (Mr. White) made a speech to which I, and I think many hon. Members, listened with great admiration. He dealt with this subject in a way of which he is master. It was a very moderate speech, but, in spite of its moderation, he has been attacked from every quarter of the Committee. I feel tempted to dispense a little with my customary moderation and to speak out rather bluntly. He was attacked by the hon. Member for Altrincham (Sir E. Grigg), by another hon. Member and by the President of the Board of Trade for suggesting that we should make a gesture at the expense, as it has been said, of our fellow-countrymen in the West Indies who grow sugar, In the proposals of the Government they have a guarantee of certain preferences for a year. All we suggest is that the period should be six months instead of a year. That will not make very much difference, nothing like as much difference as the beet sugar proposals of the Government. We did not hear so many protests then or so much sympathy then from the hon. Member for Altrincham and his friends. That is what really damaged the interests of the West Indian colonists, and this Measure would scarcely damage them at all. It is said that this six months would not be of much value as a gesture. It would be of immense value. Let me remind the Committee that it is six months from August to February. The present preference would continue until February of next year—

The Deputy-Chairman: I think that the right hon. Gentleman was absent from the Chamber, and may not have learned the fact that the Amendment was withdrawn, and that we are now discussing the Question, "That the Clause stand part."

Sir A. Sinclair: Permit me to say that I withdrew for some three minutes from the Chamber at a time when an hon. Member opposite was speaking. With the exception of those three minutes about five minutes ago, I have been in the Chamber throughout the whole Debate and listened to every speech, and, if you will allow me to say so, I resent the reflection you make on my attendance in the Chamber during the Debate. I was present, and I understood the Amendment had been withdrawn, and that we are now free to discuss this proposal. I will put the matter in this way—and I do not think

the interruption really affects the point of my argument at all—if the Clause is rejected the effect will be that the preference would be removed in February instead of lasting until August of next year. In the meantime, we know that negotiations are going on with the United States of America. By that time we shall know what the prospects of success are. If it be that there are good prospects of success, it may be useful to have our hands free during the succeeding six months. In fact, it may very seriously affect the prospects of those negotiations if we can have our hands free instead of tied. If, on the other hand, negotiations break down, the Government can then re-enact these preferences and give the benefit to the Colonies. In the meantime, the American Government will know that we are making a serious effort to free our hands so as to give our negotiators the best possible chance of making arrangements with them in the trade negotiations which are now about to take place.
Then the President of the Board of Trade said there was no antithesis between developing the policy of Imperial Preference and making an agreement with the United States of America. He said the United States had never tried to get us to abandon the policy of Imperial Preference; and that is true, but what is equally true is that the Ottawa Agreements in their present form, with their guaranteed margins of preference, with the closing of the door in our Colonial Empire, have been deeply resented in the United States, as they have been in France, in Germany and in a great many other countries. Hon. Members must not expect Ministers and Presidents of friendly republics to make criticisms of the policy of a foreign nation, but Mr. Roosevelt, before he became President, expressed quite clearly his unfavourable opinion of the Ottawa Agreements and M. Bastid, although he is the French Minister of Commerce, speaking in the discussions at Geneva while the currency agreement was being negotiated last Autumn, said frankly across the table to our representatives "We suffer from some of your measures, notably the Ottawa Agreements." The German Ambassador has made similar statements. It is well known that those Agreements have caused intense resentment in foreign countries.

Mr. Radford: Will the right hon. Gentleman say what effect their tariffs had on us for so many years?

Sir A. Sinclair: I really do not think that is relevant. [HON. MEMBERS: "Oh."] I will tell hon. Members why. Of course I know that tariffs are damaging, by whatever country they are imposed, and I think they are damaging to the interests of the country which imposes them as well as to other countries. But I was dealing not with the general question, as it would be out of order now, but with the argument of the President of the Board of Trade that foreign countries do not resent the British Ottawa policy, and I was merely stating that that was not in accordance with the facts, and I quoted my evidence for refuting his contention. The President of the Board of Trade went on to say that after 1931 there was a wreckage of all international trades and that this little island was saved by Protection and Imperial Preference. [HON. MEMBERS: "Hear, hear."] I am glad that hon. Members are cheering to keep up their courage. So far from that being the case, the fact is that in the great world depression which did take place from 1930 to 1933 there was no country, certainly no Protectionist country, which suffered less than this country; whether we take the level of real wages, or the prices of securities on the Stock Exchange, or the cost of living or any other criterion, the people of this country suffered less than the people of any country in the world.
I have many points with which I should like to deal, but if I tried to refute all the fallacies and inaccuracies to which we have been listening I am afraid that I should keep the Committee longer than they would be willing to bear with me. I would say in reply to the right hon. Member for Sparkbrook that it is not a fallacy to believe that economic nationalism has been aggravated by our policy. I remember very well attending a luncheon in 1933 at which I was the only man present who was not a Protectionist, and a gentleman who had been in the last pre-Hitler German Government who was there described the efforts which that Government had made to bring about trade relations not with countries across the ocean but with the Danubian countries. He said, "Our negotiations were making good progress, but then came Ottawa." I dare say there are some hon. Members present who were also at that luncheon. I pricked up my ears at his statement.

They laughed, and said, "He is interested in that." He stuck to his point and said that the fact that Britain had finally plunged for economic Imperialism as embodied in the Ottawa Agreements had shattered hopes, even in central Europe, of being able to stand against the forces which were making for economic nationalism.
The right hon. Gentleman talked about the drift to autarchy in other countries and said that the high protectionist tariffs in the United States, resulting in the great accumulation of gold there, were the main cause of the depression. That is just the danger of the drift to autarchy. Let him therefore join with us in calling on the Government to take every measure to stop it and to arrest it in co-operation with the United States. At the present moment we have great forces in the world working towards the liberation of trade and intercourse between the nations in Scandinavia, Holland, Belgium, France, in the United States of America above all, and, indeed, in the whole American continent, as was shown by the resolutions of the Monte Video Conference last year. There is a strong movement of opinion towards the liberation of trade and intercourse between the nations of the world, and if we do not grasp this opportunity now it may well prove to be the last. That is why I rejoice that the right hon. Gentleman has given us an opportunity to-day of calling upon the Government to seize the occasion while they have the chance, and to make this reasonable and modest gesture which the right hon. Gentleman has proposed of striking out Clause 2.

6.7 p.m.

Sir H. Croft: I should like to pursue the right hon. Gentleman over the varied course he has taken. He referred to a meeting which took place yesterday. He was not present and, of course, I do not complain, because he was not invited, but had he done us the honour of reading our resolution, which was carried unanimously, he would have read words to the effect that we were ready to consider any proposals which might assist trading arrangements with foreign countries but that it must not be at the expense of existing trade under our preferential arrangements with the Empire. I hope the right hon. Gentleman will realise that those who are associated with that committee have not opposed trading arrangements


with foreign countries. We may have criticised one or two items, but as a whole we have not opposed the main questions put in this House in regard to the various Agreements, in spite of the fact that some of them have not proved to be very efficacious. The right hon. Gentleman seems to think there is something vicious in our granting preferences. Does he really mean that a country should not be allowed to prefer the products of its own nationals? Whenever did he get up and condemn the United States for granting preference to the products of her colonies? He tells us that a French statesman criticised Ottawa. Does he know what France does in the case of her own colonies? It is not a case of preference only because there is absolute exclusion of the products of other countries. I do not understand why he must always take the side of other countries in the world against his own country.

Sir A. Sinclair: I was not taking sides, and the hon. and gallant Member has no right to make that point. I was not taking the side of any foreign country. I was merely answering a statement made from the Treasury Bench that our policy was not resented by other countries, and I proved that it was.

Mr. Stanley: I do not mind the right hon. Gentleman misquoting me once, but when he does so two or three times I must correct him. What I said was that, as far as I knew, the United States of America had never demanded the abandonment of our policy of Imperial Preference in connection with these negotiations.

Sir A. Sinclair: I did not mean to misquote the right hon. Gentleman.

Sir H. Croft: I certainly rather understood the right hon. Gentleman to be criticising his own country, and to be putting forward a strong criticism of the policy by which we have given some slight advantage to those countries which have given somewhat similar advantages to us. I was somewhat comforted by the speech of the President of the Board of Trade. I was glad to hear that there has been no suggestion from the United States of America that we should impair the effects of the Ottawa Agreements, and, subject to that, I think that the President of the Board of Trade will always find Members of this House ready

to consider favourably any proposals for an extension of our overseas trade. Where we differ profoundly from hon. Members on the Liberal benches is that we believe that it is not true to say that by merely transferring trade from our own producers in this country or from producers in the Empire to foreign countries we are thereby giving an advantage to any of our own nationals; nor are we giving an advantage to world trade as a whole.

Mr. MacLaren: Trade is not a constant quantity.

Sir H. Croft: The hon. Member says that trade is not a constant quantity, and I am glad to hear that he holds that view, because he may have noticed the great progression in the total trade of the Empire since these agreements were brought about, in no case, so far as we can discover, at the expense of foreign trade, which has shown quite a satisfactory increase as compared with the increases taking place in other parts of the world, what I maintain is that no Member of this House and no foreigner has any right to dispute the correctness of our action in preferring the products of our own people in this country or in the Empire. An hon. Member who sits for one of the Universities, speaking only a week ago, said the United States enjoyed the advantage of having within its borders a great Free Trade area, with a high tariff against countries outside. We are doing something to promote a second great Free Trade area in the world. The right hon. Gentleman laughs, but I think everybody knows that we admit practically all Empire products free, and I think it must also be agreed that in the last two years the great Dominions have tended to reduce their tariffs in favour of our products. I believe there is not a single hon. Member who is opposed to this idea: If it is right for all the various States of America, all of which originally had tariffs, I believe I am right in saying, to have complete reciprocity among themselves, why is it wrong for us in this country to have a similar arrangement with the Commonwealth of Australia, with the Dominion of Canada and with the other parts of the Empire? I venture to think that it was an unhappy speech which we heard from the hon. Member for East Birkenhead (Mr. Graham White). We have just had


these hundreds of thousands, as I think I may put it, of people from every part of the Empire coming to this country, and we have been making speeches welcoming them, and are we now to have speeches inferring that we have no right to prefer their products to those of other lands?
What we ought to aim at now, although perhaps we have not been wise in our policy in the past, is to have a normal tariff, not too high, against all the world, and that then we should have a second tariff for those countries who are ready to meet us. I should like to see it extended to the United States and the Oslo countries, if and when the United States is prepared to reduce her tariff to the same level as ours. The day when the United States shows that she is really converted to that policy and is ready to reduce her tariff to the same level as ours, I, for one, would be prepared to say: "Let us accept this gesture and give an undertaking that we most certainly will not extend our duties against her within a reasonable period of years."
If we can arrive at something like that we shall, I believe, be on the road to better trade arrangements. I believe that I am speaking for the great majority of those who support the Government when I say that we value the great advantages given to home and Empire trade under the Ottawa arrangements, and that we are ready to consider any proposals with any foreign country; but it must not be at the expense of Empire producers. We certainly decline to agree to bring to an end by August in this country the sugar preference to the British Empire and so put the producers in a parlous position.

6.17 p.m.

Mr. James Griffiths: I intervene only because several hon. Members have referred to what they call the parlous position in which the Labour Government is alleged to have left this country, and have at the same time extolled the virtues of the policies pursued by the National Government. I want to give one or two figures, and to ask hon. Members how they can reconcile those figures with the statements that they have been making. In 1929 the Labour Government began to build up with the Dominion of Canada, without any tariff wall but by mutual

negotiation, a trade that has been of enormous advantage to the Division which I represent. It was a trade by which we exported from this country a considerable quantity of coal to the Dominion of Canada, most of it anthracite coal from my Division. A smaller proportion of it was steam coal. That export of coal increased from 1929 until the time when the National Government took office. From the day when the National Government changed the fiscal policy of this country and we became a tariff country, that trade with Canada declined.
I propose to quote figures to support my argument, and I should like the President of the Board of Trade and any hon. Gentleman who extols the virtues of tariffs to tell me how they reconcile these figures with the tariff policy which, they say, gives preference to our Colonies and Dominions in our markets and a preference to our producers in the markets of the Dominions and Colonies. I ask hon. Members how they reconcile that theory, of which they speak so glowingly, with the facts that I shall put before them. In 1934–36 our exports of coal to Canada declined by nearly 500,000 tons. Our export of anthracite coal to the Dominion of Canada in 1936 was 250,000 tons less than in 1934—not than in 1931, that terrible year, that catastrophic year, 1931, as hon. Members opposite regard it, but the year 1934—

Sir H. Croft: As the hon. Member may be making a reference to myself, may I say that the answer is that the trade in anthracite coal with Canada has been undersold to such an extent by Russian slave labour—[Interruption].

Mr. Griffiths: It is just because this much-extolled tariff does not protect us against cheap labour elsewhere that I rose to speak. In 1934 we exported 1,384,704 tons of anthracite to the Dominion of Canada. By 1936, that export had declined to 1,140,000 tons, a decline of 244,000 tons. The total export in 1931 of all kinds of coal to the Dominion of Canada was 1,746,000 tons. In 1936, the corresponding figure was only 1,284,000 tons, a reduction of 461,000 tons in our exports to the Dominion of Canada, where we are supposed to have preference for our products. Now for the hon. and gallant Gentleman with his cheap Russian coal. In 1934, the amount of German


coal imported into Canada was 31,000 tons. In 1936, that had increased to 266,000 tons. Therefore, in this Dominion of Canada, and under this marvellous tariff and this great National Government who are protecting our trade, our trade with the Dominion of Canada has been lost, not to the slaves of Russia, but to the slaves of Hitler and Germany, whom many hon. Members would like to see imitated in this country.
There is a further point. The Dominion of Canada has concluded an agreement with the representatives of what the hon. and gallant Gentleman is pleased to call the slaves of Russia, under which the Dominion, our kith and kin, our own people are to admit, during 1937, 250,000 tons of anthracite from Russia to the exclusion of anthracite from West Wales. I presume, therefore, that the Russians are more kith and kin to the Canadians than are the South Wales miners. I therefore want to ask the President of the Board of Trade and the Government—the Government who are failing to keep the trade which the Labour Government built up—[Laughter]. Hon. Members may laugh, but they cannot laugh these figures away. Does the President of the Board of Trade deny these figures?

Mr. Craven-Ellis: Mr. Craven-Ellis rose—

Mr. Griffiths: I am asking my question of the President of the Board of Trade and the Secretary for Mines, whether they deny these figures. Do they deny that the export of anthracite coal to Canada has declined to this extent? These figures I got out half an hour ago from the Government's own Trade and Navigation Returns. Do they issue false figures, or are these figures correct? The figures prove that this much-extolled tariff system has damaged the export trade in coal to Canada. Before the National Government came into office, that trade meant continuous work, but there are men now who have been out of work for years, whom the Labour Government put into work without any tariff but by mutual negotiation. I ask the President of the Board of Trade how he reconciles this tariff system, this Imperial Preference, this trade with kith and kin, with the fact that the Dominion of Canada prefers coal produced by Hitler's slaves, and in Russia. How does he explain that Canada prefers that coal to the coal produced by Welshmen and Englishmen in this country? Is

that all that the tariff policy gives us? All that the tariff policy of this Government has done in my own area is to close pits and put men on the dole. For all those reasons I urge the President of the Board of Trade to give us an explanation.
The Imperial Conference is taking place. I put a question to the Secretary for Mines and to the President of the Board of Trade, but all they said was: "Well, we are considering the matter." I asked the question a fortnight ago as to whether advantage would be taken of the assembly of the Imperial Conference to discuss this matter and find out how it was that now, under the tariff system and during the year 1937, 250,000 tons of Russian coal would be brought into Canada to displace Welsh coal. That is the vaunted tariff system of which hon. Members have spoken so eloquently this afternoon.

The Chairman (Sir Dennis Herbert): It has been difficult to arrest the somewhat strong and powerful flow of this Debate. Perhaps it would rather shorten it if hon. Members who propose to address the Committee would look at Clause 2 and remember that the Question is, "That the Clause stand part of the Bill." That is rather a weak peg upon which to hang a discussion of hon. Members' different and detailed fiscal creeds.

Mr. Holdsworth: On a point of Order. Certain statements have been made by the hon. and gallant Member for Bournemouth (Sir H. Croft). Are we not entitled to refer to them?

The Chairman: That is not a point of Order for me to answer now; but if the hon. Member is called and attempts to answer arguments, and if I find that he is going outside what I consider relevant, I shall do my best to stop him.

Mr. Kelly: On a point of Order. I want to draw your attention to the fact that this Debate is being conducted in the absence of the Chancellor of the Exchequer, and to ask whether it is not proper that he should be here.

The Chairman: That, again, is not a point of Order. The hon. Member should know that.

6.27 p.m.

Mr. Peat: I should like to put one point of view which I think has not been expressed before. The right hon. Gentle-


man the Member for Caithness and Sutherland (Sir A. Sinclair) claimed that the horizon of the Government's policy of tariffs was blurred. I can well believe that that is his view, as lie is one of those who hold that the true and undiluted Liberal doctrines are still good, in the world as we know it to-day. I believe that the Government's policy is based upon the straightforward principle of endeavouring to combine Empire economic policy with a policy which includes other nations of the world. It can be summed up in a short sentence or two. In the last few years conditions have been changing with increasing rapidity. I think we are in a position to negotiate important trade agreements, say between this country and America, but the time has now arrived when any negotiation of that sort must be made by the Empire as a whole. To suggest that it is an important gesture that this country should threaten to lift Imperial Preference in six months instead of one year, without having consulted any of our Dominions, or any of those who work with us in this great Empire, is humbug of the very first water. I do not believe it will get us anywhere. I believe that any gesture or negotiation of an important character must be made by the Empire as a whole.

Sir A. Sinclair: The hon. Gentleman speaks of humbug; is it not rather humbug, at a time when Australia is making separate agreements with Japan and -Canada, separate agreements with the United States, to say that it is wrong for us to make separate agreements with the United States?

Mr. Bellenger: On a point of Order. May I ask for your Ruling, Sir Dennis, as to the use of the expression "humbug"? I raised the question on a previous occasion with your predecessor in the Chair as to whether it was in order to use that expression.

The Chairman: I did not hear anything which I thought called for a Ruling upon the use of that word.

Mr. Peat: I did not use the word "humbug" in any personal sense. What I referred to as humbug was the suggestion that to threaten to uproot Imperial Preference in six months without consulta-

tion with the other parties to it would be doing nothing to contribute to trade agreements between this country and America.

6.30 p.m.

Mr. Holdsworth: I have always a great admiration for the consistency of the hon. and gallant Member for Bournemouth (Sir H. Croft) on the question of Imperial Preference, but I have no admiration for his ideas about economics. He began by saying that he thought my right hon. Friend had a wrong idea about the question of Imperial Preference, and he said that foreigners should not get trade at the expense of the Colonies. That statement is based on the assumption that there is a static amount of world trade—so much to be given to the Colonies, so much to be given to foreign nations; but I suggest to the hon. and gallant Gentleman that there is no such thing as a static amount of world trade. We on this bench believe that any impediment to trade lessens the total amount, and that, if these restrictions were taken off, there would be a better chance of a greater amount of trade, not only for the Colonies, but for all the nations of the world. The hon. and gallant Gentleman made the charge against my right hon. Friend that he had never raised his voice against other countries giving their colonies preference in their own markets, but we have never defended the attitude of other countries in that respect.
I want to deal with the statement of the hon. and gallant Gentleman that he wanted to promote a Free Trade Empire. We in Bradford, although I am willing to admit that there has been during the past two years an extension of our trade with the Empire, have to buy from the Empire goods which come here free of duty, and at the same time we have to meet tariffs ranging from 100 per cent. in our Dominions down to 20 and 30 per cent. Let me give the hon. and gallant Gentleman some figures. He gave the Committee some figures about a fortnight ago, and he had to withdraw them; he acknowledged, when the hon. Member for Kingswinford (Mr. A. Henderson) corrected him, that his figures were wrong.

Sir H. Croft: The question addressed to me during that Debate was in regard to a subject which had nothing to do with the point with which I was dealing, and I


stated that I had not the figures by me. Thereafter there was a controversy, and I agree that the figures given at that time were correct. I did not quote any figures.

Mr. Holdsworth: Oh, yes. The hon. and gallant Gentleman began by stating that he always made quite sure of his figures, and he then made a general statement that certain figures were balanced over a period of years. When he was challenged by the Member for Kingswinford, who then gave the correct figures, the hon. and gallant Gentleman had to admit that he was wrong. I will quote some figures which have been sent to me this morning by the Bradford Chamber of Commerce. In 1913, when there was no preference in the country, we sold to Australia 1,328,800 lbs. of worsted yarn—

Mr. Amery: There was a preference at that time in Australia in respect of British goods.

Mr. Holdsworth: In 1935, with this so-called further preference, the figure had sunk from 1,328,800 lbs. to 103,500 lbs.

Mr. Raikes: Would the hon. Member give the figures for 1931?

Mr. Holdsworth: I know that since 1931 there has been an increase. I have already said that during the past two or three years there has been some increase, but I want to go back to the point when we in this country were not thinking in terms of this country giving a preference. In the case of woollen yarn, in 1913 we sold to Australia 375,200 lbs., and in 1935 only 43,300 lbs. Of worsted tissues, the quantity we sold to Australia in 1913 was over 6,000,000 yards. I may say that a piece is something like 54 inches wide, so that the number of square yards would be half as many again, or over 9,000,000 square yards. In 1935, after this marvellous system of preference, we only sold 407,000 square yards. Again, in the case of woollen tissue, Australia took from us, in 1913, 9,668,000 linear yards, or something between 12,000,000 and 13,000,000 square yards, whereas in 1935 she only took 1,200,000 square yards. Since 1931, in many cases, there has been an increase, but that was when the lowest point was reached.
Turning to Canada, our trade in worsted yarns has declined by approximately one-

half since 1913, while in the case of worsted tissues, whereas in 1913 Canada took from us 9,000,000 linear yards, or between 12,000,000 and 13,000.000 square yards, in 1935 she only took 5,500,000 square yards. In the case of woollen tissues, the figure for 1913 was 15,000,000 linear yards, or 20,000,000 square yards, while in 1935 it had declined to 8,000,000 square yards. I heard the word "humbug" used. It is thorough humbug to talk about Empire Free Trade. There is no such thing. My objection to this business is that we are not getting a square deal in these matters. Our trades are having to meet, in many cases, mountainous tariffs. Taking the Empire as a whole, so far as the woollen and worsted textile trade is concerned, in a large part of the Empire we have bigger tariffs to meet than in foreign countries. If I am asked to assent to a system of Imperial Preference, I say, let them give us a real preference in the Dominions.

Sir H. Croft: Does the hon. Member suggest that there is not a real preference in every Dominion?

Mr. Holdsworth: There is no real preference at all. At the moment our woollen textile trade is having a dispute with Australia, and we are arguing about tariffs of 100 per cent. Where is the preference there? I remember the speech that I made on the Ottawa Agreements, in which I said that I was offered the opportunity of either jumping over Mr. Speaker's Chair or jumping over the Clock, and that I could not do either. The hon. and gallant Gentleman is always lecturing us about the Empire. I am as proud of the Empire as he is, but, if I am making a bargain with anybody, I want him to give me a square deal if I give him a square deal. In many of these cases it is sheer nonsense to talk about Imperial Preference, and we believe that the continuance of this kind of thing is restricting the area of world trade. In conclusion, I would repeat that to base an argument on the belief that there is a static amount of world trade is the worst kind of political economy that I have ever listened to.

6.42 p.m.

Mr. Amery: The speech to which we have just listened can, I think, be summed up in one sentence. It is an argument that the whole policy of


Imperial Preference is a fraud, because, in certain items of the woollen and worsted trade, the growth of Australian Protection has interfered with our exports. The hon. Member said nothing about the trade, even in woollens and worsteds, with other parts of the Empire where preference is to be found, and he said nothing about the general situation, but nobody can deny that there has been, as a result of preference, a substantial growth of our trade with the Empire as a whole. In the last four years our exports to the Ottawa countries have gone up from £74,000,000 to £104,000,000, an increase of 46 per cent., and I think that that is sufficient to show the general result. Their giving us reductions in their duties, or raising their duties in our favour as against foreign countries, has had the desired and intended result, just as our raising duties against foreign countries and giving free entry to goods from the Dominions has had a corresponding result in their case. That is all that has ever been claimed, and on this ground we justify that policy. The

mere fact that, in some particular case, either we impose duties which may interfere with the trade of some Dominion, or they impose a duty in the interests of their trade which may interfere with some trade or industry of ours, is purely incidental. The last thing that either they or we would ask one another is that we should not be allowed to develop our own trade in the interests of our own production and industries. Subject to that, we give the utmost advantage that we can to our fellow-citizens in the Empire.

6.45 p.m.

Mr. Benn: We have had a most interesting Debate on one of the most important items of Government policy. The only thing lacking is any statement—and I know that it is useless to plead for it—from the Chancellor of the Exchequer.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 229; Noes, 134.

Division No. 209.]
AYES.
[6.45 p.m.


Acland-Troyte, Lt.-Col. G. J.
Cooke, J. D. (Hammersmith, S.)
Gridley, Sir A. B.


Albery, Sir Irving
Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs)
Grigg, Sir E. W. M.


Allen, Col. J. Sandeman (B'knhead)
Cooper, Rt. Hn. T. M. (E'nburgh, W.)
Guinness, T. L. E. B.


Amery, Rt. Hon. L. C. M. S
Cox, H. B. T.
Guy, J. C. M.


Anderson, Sir A. Garrett (C. of Ldn.)
Craven-Ellis, W.
Hannah, I. C.


Anstruther-Gray, W. J.
Critchley, A.
Hannon, Sir P. J. H.


Aske, Sir R. W.
Croft, Brig.-Gen. Sir H. Page
Harbord, A.


Assheton, R.
Crooke, J. S.
Haslam, H. C. (Horncastle)


Baillie, Sir A. W. M.
Croom-Johnson, R. P.
Haslam, Sir J. (Bolton)


Balfour, Capt. H. H. (Isle of Thanet)
Crossley, A. C.
Heilgers, Captain F. F. A.


Balniel, Lord
Crowder, J. F. E.
Heneage, Lieut.-Colonel A. P.


Beamish, Rear-Admiral T. P. H.
Cruddas, Col. B.
Hepburn, P. G. T. Buchan-


Beaumont, M. W. (Aylesbury)
Davies, Major Sir G. F. (Yeovil)
Herbert, A. P. (Oxford U.)


Beaumont, Hon. R. E. B. (Portsm'h)
Davison, Sir W. H.
Herbert, Major J. A. (Monmouth)


Bernays, R. H.
Denman, Hon. R. D.
Higgs, W. F.


Birchall, Sir J. D.
Doland, G. F.
Hills, Major Rt. Hon. J. W. (Ripon)


Blair, Sir R.
Donner, P. W.
Holmes, J. S.


Bower, Comdr. R. T.
Dower, Major A, V. G.
Hope, Captain Hon. A. O. J.


Boyce, H. Leslie
Drewe, C.
Hopkinson, A.


Bracken, B.
Duckworth, Arthur (Shrewsbury)
Horsbrugh, Florence


Briscoe, Capt. R. G.
Dugdale, Captain T. L.
Hudson, Capt. A. U. M. (Hack., N.)


Brocklebank, Sir Edmund
Duggan, H. J.
Hudson, R. S. (Southport)


Brown, Col. D. C. (Hexham)
Duncan, J. A. L.
Hume, Sir G. H.


Bull, B. B.
Dunglass, Lord
Inskip, Rt. Hon. Sir T. W. H.


Bullock, Capt. M.
Edmondson, Major Sir J.
James, Wing-Commander A. W. H.


Burton, Col. H. W.
Elliot, Rt. Hon. W. E.
Joel, D. J. B.


Carver, Major W. H.
Ellis, Sir G.
Keeling, E. H.


Castlereagh, Viscount
Elmley, Viscount
Kerr, Colonel C. I. (Montrose)


Cayzer, Sir C. W. (City of Chester)
Emery, J. F.
Keyes, Admiral of the Fleet Sir R.


Cayzer, Sir H. R. (Portsmouth, S.)
Emmott, C. E. G. C.
Kimball, L.


Cazalet, Thelma (Islington, E.)
Emrys-Evans, P. V.
Knox, Major-General Sir A. W. F.


Chamberlain, Rt. Hn. N. (Edgb't'n)
Entwistle, Sir C. F.
Lamb, Sir J. Q.


Channon, H.
Findlay, Sir E.
Lambert, Rt. Hon. G.


Chapman, Sir S. (Edinburgh, S.)
Fox, Sir G. W. G.
Law, R. K. (Hull, S.W.)


Chorlton, A. E. L.
Ganzoni, Sir J.
Lees-Jones, J.


Christie, J. A.
Gibson, Sir C. G. (Pudsey and Otley)
Leighton, Major B. E. P.


Clarke, F. E. (Dartford)
Gledhill, G.
Levy, T.


Clarke, Lt.-Col. R. S. (E. Grinstead)
Glyn, Major Sir R. G. C.
Lewis, O.


Clarry, Sir Reginald
Goodman, Col. A. W.
Liddall, W. S.


Cobb, Captain E. C. (Preston)
Gower, Sir R V.
Lindsay, K. M.


Colfox, Major W. P.
Grattan-Doyle, Sir N.
Llewellin, Lieut.-Col. J. J.


Colville, Lt.-Col. Rt. Hon. D. J.
Gretton, Col. Rt. Hon. J.
Lloyd, G. W.




Loftus, P. C.
Pownall, Lt.-Col. Sir Assheton
Strauss, H. G. (Norwich)


Loval-Fraaer, J. A.
Procter, Major H. A.
Strickland, Captain W. F.


MacAndrew, Colonel Sir C. G.
Radford, E. A.
Stuart, Lord C. Crichton- (N'thw'h)


MacDonald, Rt. Hon. M. (Ross)
Raikes, H. V. A. M.
Stuart, Hon. J. (Moray and Nairn)


Macdonald, Capt. P. (Isle of Wight)
Ramsay, Captain A. H. M.
Tasker, Sir R. I.


McKie, J. H.
Ramsden, Sir E.
Tate, Mavis C.


Macnamara, Capt. J. R. J.
Rathbone, J. R. (Bodmin)
Taylor, Vice-Adm. E. A. (Padd., S.)


Macquisten, F. A.
Rawson, Sir Cooper
Thomas, J. P. L.


Magnay, T.
Rayner, Major R. H.
Thomson, Sir J. D. W


Manningham-Buller, Sir M.
Reed, A. C. (Exeter)
Titchfield, Marquess of


Margesson, Capt. Rt. Hon. H. D. R.
Raid, Sir D. D. (Down)
Touehe, G. C.


Markham, S. F.
Rickards, G. W. (Skipton)
Tree, A. R. L. F.


Mason, Ll.-Col. Hon. G. K. M.
Ropner, Colonel L.
Tryon, Major Rt. Hon. G. C.


Maxwell, Hon. S. A
Ross Taylor, W. (Woodbridge)
Tufnell, Lieut.-Commander R. L.


Mayhew, Lt.-Col. J.
Rowlands, G.
Turton, R. H.


Meller, Sir R. J. (Mitcham)
Salmon, Sir I.
Wakefield, W. W.


Mellor, Sir J. S. P. (Tamworth)
Salt, E. W.
Wallace, Capt. Rt. Hon. Euan


Mills, Sir F. (Leyton, E.)
Samuel, M. R. A.
Ward, Lieut.-Col. Sir A. L. (Hull)


Mills, Major J. D. (New Forest)
Scott, Lord William
Ward, Irene M. B. (Wallsend)


Morrison, G. A. (Soottish Univ's.)
Shakespeare, G. H.
Wardlaw-Milne, Sir J. S.


Morrison, Rt. Hon. W. S. (Cirencester)
Shaw, Major P. S. (Wavertree)
Waterhouse, Captain C.


Munro, P.
Shute, Colonel Sir J. J.
Wayland, Sir W. A.


Nail, Sir J.
Simmonds, O. E.
Wedderburn, H. J. S.


Nioolson, Hon. H. G.
Simon, Rt. Hon. Sir J. A.
Wells, S. R.


O'Connor, Sir Terence J.
Smiles, Lieut.-Colonel Sir W. D.
Windsor-Clive, Lieut.-Colonel G.


O'Neill, Rt. Hon. Sir Hugh
Smith, L. W. (Hallam)
Winterton, Rt. Hon. Earl


Orr-Ewing, I. L.
Smith, Sir R. W. (Aberdeen)
Wise, A. R.


Patrick, C. M.
Somervell. Sir D. B. (Crewe)
Withers, Sir J. J.


Peaks, O.
Somerville, A. A. (Windsor)
Womersley, Sir W. J.


Peat, C. U.
Southby, Commander Sir A. R. J.
Wood, Hon. C. I. C.


Perkins, W. R. D.
Spears, Brigadier-General E. L.
Wood, Rt. Hon. Sir Kingsley


Petherick, M.
Stanley, Rt. Hon. Oliver (W'm'l'd)
Wragg, H.


Pickthorn, K. W. M.
Storey, S.
Wright, Squadron-Leader J. A. C.


Pilkington, R.
Stourton, Major Hon. J. J.



Porritt, R. W.
Strauss, E. A. (Southwark, N.)
TELLERS FOR THE AYES.—




Mr. Cross and Mr. Grimston.




NOES.


Acland, Rt. Hon. Sir F. Dyke
Harvey, T. E. (Eng. Univ's.)
Pritt, D. N.


Adams, D. (Consett)
Henderson, A. (Kingswinford)
Quibell, D. J. K.


Adams, D. M. (Poplar, S.)
Henderson, J. (Ardwick)
Richards, R. (Wrexham)


Adamson, W. M.
Henderson, T. (Tradeston)
Ridley, G.


Ammon, C. G.
Hills, A. (Pontefract)
Riley, B.


Barnes, A. J.
Holdsworth, H.
Ritson, J.


Barr, J.
Hopkin, D.
Roberts, Rt. Hon. F. O. (W. Brom.)


Bellenger, F. J.
Jenkins, A. (Pontypool)
Rowson, G.


Bonn, Rt. Hon. W. W.
Jenkins, Sir W. (Neath)
Salter, Dr. A. (Bermondsey)


Broad, F. A.
Johnston, Rt. Hon. T.
Sexton, T. M.


Bromfield, W.
Jones, A. C. (Shipley)
Short, A.


Brown, C. (Mansfield)
Jones, Sir H. Haydn (Merioneth)
Silkin, L.


Brown, Rt. Hon. J. (S. Ayrshire)
Jones, J. J. (Silvertown)
Silverman, S. S.


Burke, W. A.
Jones, Morgan (Caerphilly)
Simpson, F. B.


Cape, T.
Kelly, W. T.
Sinolair, Rt. Hon. Sir A. (C'thn's)


Cluse, W. S.
Kennedy, Rt. Hon. T.
Smith, Ben (Rotherhithe)


Clynes, Rt. Hon. J. R.
Lathan, G.
Smith, E. (Stoke)


Cocks, F. S.
Lawson, J. J.
Smith, Rt. Hon. H. B. Lees- (K'ly)


Cove, W. G.
Leach, W.
Smith, T. (Normanton)


Cripps, Hon. Sir Stafford
Lee, F.
Sorensen, R. W.


Dagger G.
Leonard, W.
Stephen, C.


Dalton, H.
Leslie, J. R.
Stewart, W. J. (H'ght'n-le-Sp'ng)


Davidson, J. J. (Maryhill)
Logan, D. G.
Strauss, G. R. (Lambeth, N.)


Davies, R. J. (Westhoughton)
Lunn, W.
Taylor, R. J. (Morpeth)


Davies, S. O. (Merthyr)
Macdonald, G. (Inee)
Thorne, W.


Day, H.
McEntee, V. La T.
Thurtle, E.


Dunn, E. (Rother Valley)
McGhee, H. G.
Tinker, J. J.


Ede, J. C.
McGovern, J.
Viant, S. P.


Edwards, Sir C. (Bedwellty)
MacLaren, A.
Walkden, A. G.


Evans, D. O. (Cardigan)
Maclay, Hon. J. P.
Walker, J.


Evans, E. (Univ. of Wales)
Maclean, N.
Watson, W. McL.


Fletcher, Lt.-Comdr. R. T. H.
Mander, G. le M.
Welsh, J. C.


Foot, D. M.
Marshall, F.
Westwood, J.


Frankel, D.
Mathers, G.
White, H. Graham


Gallacher, W.
Maxton, J.
Whiteley, W.


Gardner, B. W.
Montague, F.
Wilkinson, Ellen


Garro Jones, G. M.
Morrison, R. C. (Tottenham, N.)
Williams, D. (Swansea, E.)


Gibbins, J.
Nathan, Colonel H. L.
Williams, E. J. (Ogmore)


Gibson, R. (Greerock)
Naylor, T. E.
Williams, T. (Don Valley)


Green, W. H. (Deptford)
Noel-Baker, P. J.
Windsor, W. (Hull, C.)


Grenfell, D. R.
Oliver, G. H.
Woods, G. S. (Finsbury)


Griffith, F. Kingsley (M'ddl'sbro, W.)
Owen, Major G.
Young, Sir R. (Newton)


Griffiths, G. A. (Hemsworth)
Paling, W.



Griffiths, J. (Llanelly)
Parker, J.
TELLERS FOR THE NOES.—


Hall, G. H. (Aberdare)
Parkinson, J. A.
Mr. Charleton and Mr. Groves.


Hall, J. H. (Whitechapel)
Pethick-Lawrence, Rt. Hon. F. W.

CLAUSE 3.—(Provisions for fulfilling agreement with Canada.)

The Chairman: I will give the right hon. Gentleman the Member for Keighley (Mr. Lees-Smith) the opportunity of explaining his Amendment, in page 2, line 21, after "fulfilment," to insert "(except in respect of Articles 3, 13 and 15)." I am not quite sure what the intention is. He will know, of course, that we cannot alter the agreement and it is a little difficult to see what will be the effect of the insertion of the words that he proposes without some further Amendment.

Mr. Lees-Smith: The object of the Amendment was to omit three of the Clauses from the Agreement. If you, Sir, rule that that is out of order, I will make my observations on the Question that the Clause stand part.

Mr. Morgan Jones: Would it be out of order to move this in view of the fact that the Agreement has not yet been ratified?

The Chairman: That does not make any difference. It is beyond question, and has been ruled in quite recent times, that a scheduled agreement such as this cannot be amended.

6.56 p.m.

Mr. Donner: I beg to move, in page 4, line 26, to leave out Sub-section (6).
My object is to endeavour to persuade the Parliamentary Secretary not to repeal Section 5 of the Ottawa Agreements Act, 1932. I do so in the belief that the weight of argument is on the side of those who hold the view that the existence on the Statute Book of this Section, which invests the Board of Trade with certain powers, serves a useful purpose; that nothing is gained and something may be lost by its deletion; that under certain clearly defined circumstances it represents a valuable bargaining instrument; and, finally, that there appears to be no valid reason why it should be abolished. It is this view to which I desire to give expression in as few words as possible. For purposes of clarification and in order that the matter will not be rendered obscure by cryptic references to Sections the contents of which hon. Members could not possibly remember, I will, with the permission of the Committee, read Section 5, Sub-section (1) of the Ottawa Agreements Act:

If at any time the Board of Trade are satisfied that any preferences granted by this Act in respect of any particular class or description of goods, being preferences granted in fulfilment of the agreement set out in Part I of the First Schedule to this Act, are likely to be frustrated in whole or in part by reason of the creation or maintenance, directly or indirectly, of prices for that class or description of goods through State action on the part of any foreign country, the Board of Trade may by order prohibit the importation into the United Kingdom of goods of that class Or description grown, produced, or manufactured in that foreign country.
The remaining Sub-sections refer to the machinery of administration and do not therefore now concern the Committee at the outset I should perhaps refresh the memory of the Committee by explaining that Section 5 was incorparted in the Ottawa Agreements Act in order to give effect to Article 21 of that Agreement. As it is important that the contents of that article should be borne in mind by hon. Members I will read it:
This agreement is made on the express condition that, if either Government is satisfied that any preferences hereby granted in respect of any particular class of commodities are likely to be frustrated in whole or in part by reason of the creation or maintenance, directly or indirectly, of prices for such classes of commodities through State action on the part of any foreign country, that Government hereby declares that it will exercise the powers which it now has or rill hereafter take to prohibit the entry from such foreign country directly or indirectly of such commodities into its country for such time as may be necessary to make effective and to maintain the preferences hereby granted by it.
I should, perhaps, add that the Canadian Government of that time attached great importance to the inclusion of Section 5 in the Ottawa Agreements Act, because they feared that the preferences which the United Kingdom Government has extended to Canada in regard to timber might be nullified by the action of the Russian Government. This Section applies, and the Parliamentary Secretary will correct me if I am mistaken, not only to Canada but to the whole Empire, although it was included in the Ottawa Agreements Act at the request and for the benefit of the Canadian Government.
There is no provision corresponding to Article 21 in the new trade agreement between this country and Canada which has been signed but not yet ratified. That is no doubt the reason why this particular Section 5 of the Ottawa Agreements Act is now to be repealed unless the Com-


mittee can persuade the Government to change their view. I would like to make it clear that in moving this Amendment the action for which I am pleading involves no legislation and no practical difficulties. All that I am asking for is a continuance of the status quo. I am asking that the Board of Trade should continue to possess the power to prohibit the importation of certain goods under certain clearly defined circumstances which would nullify in whole or in part the effect of Imperial Preference. It may be argued that these powers will never be required. In that event they would obviously never be used. But if they are on the Statute Book they are to hand and should they be required they can be put into operation without delay. It is obvious that there is something to be gained by their retention, and nothing gained by their removal. It would seem to be a matter of common sense to retain these powers and use them should it be necessary so to do. They represent a formidable bargaining instrument, and a measure of protection which should not lightly be set aside.
I may be told that these powers have never been put into operation. In my submission it would be reasonable to deduce from that that their very existence has prevented any attempt on the part of foreign countries to frustrate or vitiate the effect of Imperial Preference, and therefore the circumstances which would call for their operation have never arisen. But it would not be legitimate to assert that if these powers had not existed no such attempts would have been made by foreign countries. The majority of truncheons in the hands of the police have never broken a man's head; their very existence has provided a sufficient deterrent. It would be an exaggeration to assert that there powers which the Board of Trade now possess stand in the same relation to Imperial Preference as colour does to paint. Colour is of the very essence of paint but it is true to say that these powers stand in the same relation to Imperial Preference as paint does to wood, because paint protects wood in very much the same way as these powers safeguard the effectiveness of the policy of Imperial Preference. It would, in my judgment, be a mistake not to attach proper significance to the value of these powers at present invested in the Board of Trade.
The validity of the argument in support of the repeal of this Section of the Ottawa Agreements is not obvious inasmuch as His Majesty's Government are not opposed to the policy of Imperial Preference. Not only are they committed to that policy and endorse it, but the Government is responsible for the whole range of the Ottawa Agreements. It follows that it must be the desire of the Government that these preferences should not be frustrated or nullified, and, this being so, there can be no object in divesting the Board of Trade of these powers. The Committee will recall that Article 21 of the Trade Agreement with Canada operated both ways, and that it placed upon both Governments the same obligation, the obligation to defend the preferences and to ensure that they would not be vitiated or destroyed either by foreign subsidies or by price manipulation on the part of foreign Governments, and the validity of the argument in support of the repeal of this Clause is surely further challenged when it becomes apparent that in the new trade agreement with Canada the Canadian Government themselves agree, in Article 8, to maintain the margins enumerated in Schedule 5. Article 8 reads:
The Government of Canada undertake in respect of the goods, the growth, produce or manufacture of the United Kingdom, enumerated in Schedule V appended hereto that the difference between the rates of duties of customs on such goods on importation into Canada, when conveyed without transhipment from any part of the British Empire, enjoying the benefits of the British Preferential Tariff into a sea, lake or river port of Canada, and the rates upon similar goods, growth, produce or manufacture of any foreign country shall not be less than the margins set out in that Schedule.
The only interpretation to which Section 8 of the new trade agreement lends itself is that the Canadian Government intend to retain the margin enumerated in Schedule 5 which covers a great range of manufactured goods, and it follows, therefore, that if the Canadian Government intends and in fact commits itself to maintain the margins of preference, it is somewhat ungracious on our part if we propose to divest ourselves of the power to protect the preferences which we on our side propose to grant to the Canadian Government. Schedule 5 covers a great range of goods, and among other items coal and anthracite. Under the new agreement we shall be


able to export to Canada coal and anthracite without any fear of unfair Russian competition, a competition which began in April of this year. I hope, therefore, that the Parliamentary Secretary will be able to see his way to accept the Amendment, because to repeal this Section would appear to result in a one-sided arrangement with the Canadian Government, and would conceivably imperil the whole effectiveness of Imperial Preference in practice. The repeal of this Section must therefore prove a source of anxiety to all who desire to see Imperial Preference as great a success in the future as it has been in the past, and I desire to express the hope that the Amendment will be accepted since it has played its part by its very existence in the past, and may well prove to be of service in the future.

7.10 p.m.

Mr. R. S. Hudson (Secretary, Overseas Trade Department): I think my hon. Friend in the speech which he made is labouring under a misapprehension. He seemed to be under the impression that this particular Section 5 of the Ottawa Agreements Act applied not merely to preferences to Canada, but to the preferences granted to other Dominions. That was the crux of his argument. As a matter of fact, it does not. If he will look at the terms of Section 5 he will see that it reads as follows:
If at any time the Board of Trade are satisfied that any preferences granted by this Act in respect of any particular class or description of goods, being preferences granted in fulfilment of the agreement set out in Part I of the First Schedule—
If the hon. Member will look at Part I of the First Schedule he will see that it is an agreement between this country and Canada in 1932. That part of the Schedule no longer holds, because it is being superseded by the new agreement which has been negotiated between the United Kingdom and Canada, and therefore this particular Section 5 really has no further relation to actuality. It can never be put into operation except in the event of Canada calling our attention to some frustration of the preferences granted under the Act of 1932. It was enacted at the special request of the then Canadian Government, and as the new Canadian Government which negotiated with the United Kingdom Government

did not ask for any such provision to be made, the hon. Member will realise that there is no justification for keeping it in operation.

7.12 p.m.

Mr. Amery: I am very surprised at my hon. Friend's speech. It is perfectly true that this provision was only introduced at the instance of Canada, and that it primarily applies to the Schedule covering the agreement with Canada.

Mr. Hudson: I am sorry if I did not make myself clear. It is not a question of the provision applying primarily to Canada; it applies only to Canada, and could not be applied in any case to any of the other Dominions.

Mr. Amery: That is the point to which I was coming. The Schedule of preferences to the other Dominions is substantially the same in almost every item as in the case of Canada, and any action of the kind referred to in that agreement would affect the importance of preferences not only to Canada but to every other Dominion producing the same type of goods, and, incidentally, in the case of most agricultural products, it would affect our own agriculture. I am not at all convinced that the Government are only able to bring that Clause into operation on a special appeal by Canada. It was our duty to give that effective safeguard, and see to it that Canadian preference was not impaired by the action of other States. We were fully entitled and in duty bound, if a preference were given to Canada or any Dominion and it was impaired by the action of Russia or any other foreign country, to take action ourselves without waiting to be appealed to, and to take action to prevent what might be a danger not only to Canada but to the whole system of preference.
We hear a good deal on the negative side about preference as a barrier. There is also the positive side of economic nationalism, especially the economic nationalism that is carried to the extent it is in a country like Russia, where, for general purposes, goods are sold at prices bearing no relation whatever to the cost of production. That is something against which it is very desirable that we should safeguard ourselves. If by any form of wording we are so limited in powers which


were originally introduced as not to be able to use them in our own defence, the answer is not in the removing of this Section from the Statute Book, but in amplifying it. Certainly, to my mind, the reply to the argument used by my hon. Friend sounded completely unconvincing. While it is very desirable, for the purposes of stability and security, to make definite agreements with the Dominions in connection with preferences, there is nothing to preclude our doing everything in our power, whenever we have an opportunity, to make that preference more effective. If the present Canadian Government do not wish to apply that Section on their side, that is no reason whatever why we should not retain a Section which enables us still to give more effective preferences to Canada if that preference should be threatened from outside.
I hope that my right hon. Friend the Chancellor of the Exchequer will give further consideration to the point raised so temperately and fairly by my hon. Friend the Member for Basingstoke (Mr. Donner), and consider whether any possible harm could be done by the retention of this provision and whether its retention might in certain circumstances —possibly unlikely circumstances—still be of some use. I was of opinion, in the long discussion which went on, that the power to retain the existence of that Section in the background had proved of no little value to our representatives. It might well be that its retention might again prove of value in some negotiation or another. I join with my hon. Friend in appealing to the Chancellor of the Exchequer to give further consideration to the matter.

7.19 p.m.

Mr. Benn: The speeches have been very interesting. We are always told that nationalists want to set up Imperial Preference, which means extending world trade, and our Government have set their hand to various documents agreeing to quotas, restrictions and the like. They are always coming up at Geneva and we are always supposed to be in favour of them. These people who speak about preferences as the basis for extending international trade come and want to enforce an unwilling Government to accept a power on behalf of a Dominion Government when they themselves have ceased to demand that they should have such power.

7.20 p.m.

Mr. Donner: May I ask the Parliamentary Secretary whether he will reconsider his attitude between now and the Report stage?

Mr. T. Smith: Why should he?

Mr. Donner: He gave the guidance for which I asked but, surely, that in no way destroys the validity of the arguments which I put before him. Would he, therefore, give an undertaking, to reconsider the matter between now and the Report stage?

7.21 p.m.

Colonel Gretton: I should like to support that plea. This really seems to be on all fours with the action of the previous Government when it set an example to the world by proceeding to seek disarmament, and then, when it was found that armaments were required, began making them in a great effort to recover the ground we had lost. This is a power and a weapon in reserve. It has not been required to be used, but it is a weapon of great potency which may be used in negotiation. I agree that it is of real value, and I hope that the Government will not throw it away, unless there is real reason or agreement in the Imperial Conference that this power is inimical to the general structure of economic relations and should be cast aside in the interests of the Empire.

7.22 p.m.

Mr. R. S. Hudson: My right hon. and gallant Friend the Member for Burton (Colonel Gretton) made use of the phrase "a weapon of great potency." As a matter of fact, this is not a weapon of great potency. Its potency has been completely spent because it refers to a non-existent schedule. It is a weapon which has never been put into operation. What my hon. Friend is asking us to do is to be more royalist than the King. I would remind him that in 1934 we put into the agreement with the country in question a specific Article. We considered it to be adequate and suitable in respect of that particular country. Again, I am glad to say we have never had to put it into operation. When the right hon. and gallant Gentleman talks about a weapon of potency, it is not the weapon that is being abandoned in this particular Clause. We are abandoning a weapon that is not required.

7.23 p.m.

Sir A. Sinclair: Really, there are two schools of thought in this Committee. There are those who regard trade as a means of national aggrandisement and as a battlefield on which we are to fight with weapons of potency, and those who regard it as a means of exchange of material wealth and commodities between the peoples of the world. The hon. Gentleman the Member for Basingstoke (Mr. Donner), who made such a charming speech, has appealed to the Government, with the support of the right hon. and gallant Gentleman the Member for Burton (Colonel Gretton), to consider this matter again before the Report stage. The Government have shown reasons which are beyond argument that the matter is not one that they could possibly reconsider. The weapon has no potency. It is out of date, obsolete and finished, and has fallen to pieces with the replacement of the original Ottawa Treaty by the new trading agreement with Canada. Really, it is for the hon. Member to reconsider his position, and not the Government.

Mr. Donner: That is hardly a fair reply to my argument. Article 21 has been replaced by Section 8 of the new agreement which has been signed but has not yet been ratified but which I took the trouble to read to the Committee, and the right hon. Gentleman should therefore have heard it.

Sir A. Sinclair: That is quite true, but the fact remains that this particular Clause in the Finance Bill only refers to the old Ottawa Agreement. It is no good the Government reconsidering their position. It is impossible for them to do anything about that Section. It is obsolete and out of date with no functions to perform. It is just being swept out of the way. It is for the hon. Member to reconsider his position before the Report stage and bring down to the House of Commons a new Clause which will embody and represent the kind of potency which he would like to see wielded in order to improve the prospects of British trade. I do not promise him my support, but I shall await the appearance of that Clause with interest. Then we can have a real Debate on the merits of the proposal of the hon. Member. Meanwhile, I feel sure that this Clause must be allowed to remain, and that

there can be no real opposition to it as it stands.

Amendment negatived.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

7.26 p.m.

Mr. Lees-Smith: We are now dealing with the Canadian Trade Agreement as a whole, and I wish to take the opportunity of raising one or two particular points which were contained in the Amendment, which was not in order. I consider that the present agreement is a great advance upon that which was originally made at Ottawa. That agreement was a one-sided arrangement in which we were at a disadvantage. I believe that we obtain far more benefit from this one, and, in particular, that it is a great improvement because, in fact, it gets rid of the Tariff Board, with that very peculiar formula upon which it had to act.
There is one feature of the agreement to which I intended to call particular attention in my Amendment. It is the Article by which we guarantee a margin of preference to a considerable range of articles imported from Canada. That means that, as a considerable number of these articles come in free of duty altogether, and as we guarantee there shall be a preference below which we shall not go, we prohibit ourselves in advance for three years from in any way lowering our tariffs on a fairly wide range of commodities. I call attention to that fact because it means that in effect we lose control over our own tariff policy, and at a period when it is even more essential that we should have a fairly free hand for some little time to come.
It happens that the argument I was going to use on that Amendment has been covered already. I was going to call attention to the fact that we are in a different position from that in which we have been for some time. Practically in all previous discussions on the possibility of lowering tariff barriers, the question of quotas and exchange restrictions throughout the world, we have been told that the difficulty lay with other countries. The fact now is that—it is obviously the case as the Debate this evening has shown—for the first time the initiative is coming from another country, and the country which would have the greatest effect in


this direction. The initiative is obviously coming from the United States of America, and it is coming very largely owing to the influence of Mr. Cordell Hull, who has already negotiated 16 treaties, and whose policy, as we know, cannot be complete until he initiates a treaty with a great industrial country like ourselves. There have been two letters in the "Times" by Sir Arthur Willert explaining the position in which the United States find themselves and pointing out that Mr. Cordell Hull is in great difficulties unless he can get agreement with manufacturing countries. Therefore, the initiative, with a real chance of agreement, is now developing from the other side of the Atlantic.
The President of the Board of Trade is new to his Department, and I would call his attention to this general feature of the present situation which he may have to face if he stays in his Department for two or three years. Undoubtedly, the great peril which confronts this country is that the trade boom is approaching its peak and it will take a turn downwards in the next two or three years. It will be of enormous assistance to this country if in the meantime we can develop our foreign trade in order to fill the gap for which we are making no other preparation. This is a very vital matter. That is why I think the right hon. Member for Sparkbrook (Mr. Amery) has taken an entirely wrong perspective of the needs of the country in not looking forward for a time instead of using the same argument that he has used ever since I have been a Member of this House.
There is an opportunity, but this kind of article in the present trade agreement is an obstacle to it. I am not at all sure that it is a very serious obstacle. As far as possible I have been following the discussions at the Imperial Conference and we know what has been said by Mr. Lyons and Mr. MacKenzie King. It is clear that they do not take as extreme a view of their own demands as the right hon. Member for Sparkbrook. He goes far beyond anything that they contemplate. They realise the very simple fact that from their own point of view it will not be wise to limit themselves to trade with this country at the expense of cutting off possible openings for trade with other countries. One half of

their trade is already with other countries. This country has a stationary population. It is inevitably going to have a diminishing population, whatever we do now, and it is quite clear that the Dominions are beginning to look forward to adjusting themselves to that fact. Therefore, I think the President of the Board of Trade was right in saying that there is not necessarily any antithesis as far as the Dominions are concerned. The problem is complicated but it is not overwhelmingly difficult. It is clear that a new situation is developing, with immense possibilities. A trade agreement with the United States might very easily be followed by one with the Oslo Powers, and probably by one with France, and if that were established and worked successfully it is possible that Germany would want to come in. If she did come in we should have a real possibility of doing something that would lead to the political appeasement of Europe.
My criticism of the Government is that they fail to realise the magnitude of the issues which arise. They failed at the Disarmament Conference in 1932. If such an agreement has to come everything will depend upon the driving force with which we push the opportunity home. We have debated this subject before. When the predecessor of the President of the Board of Trade represented the Government, I am bound to say that the whole impression he made upon me was that, apart from missing an opportunity, the very mention of the subject seemed to plunge him into a fit of melancholia. I hope that the right hon. Gentleman to-day is not going to be driven from a path which is obviously wise and advantageous to the trade of this country by the right hon. Member for Sparkbrook, and that this opportunity is not going to be allowed, like the Disarmament Conference, finally to end in smoke.
There is one further feature of the Agreement to which I would call attention, because it seems to tie our hands at the moment when they ought to be free. It is the Clause which practically extends the system of Imperial Preference to the Colonies and Protectorates; to what one might call the dependent Empire. That is important again from the point of view of our general policy. The year before last the Foreign Secretary of that time, now the Home Secretary, delivered a famous speech at Geneva in which he


told the world that we would consider the question of access to raw materials. That was our initiative, and as a result of that initiative discussions are now taking place at Geneva. It is quite clear that on an examination of the arguments put forward by Dr. Schacht and other German leaders most of their arguments are wrong. The argument that they find difficulty in obtaining raw materials from the British Colonies and Protectorates is obviously contrary to well-known facts, because the Colonies have been willing to sell raw materials to anybody, inasmuch as they have had an excess of production.
There is, however, one argument which has been brought forward by German spokesmen and by the spokesmen of the Allied nations which appears to me logically, economically and perfectly sound. The argument is that you cannot easily buy goods, raw materials, from our Colonies unless you can sell goods to them equally easily, and that if you put any country or any group of countries at a disadvantage in selling goods to our Colonies you put them at a disadvantage in buying raw materials from those Colonies. That appears to me to be a valid argument and it will probably be the final argument that will emerge from the discussions at Geneva. The difficulty in which we are now is that by this new Trade Agreement with Canada we prohibit ourselves from meeting that argument. We deliberately put them at a disadvantage in selling to our Colonies and, therefore, at a disadvantage in buying from them.
I am very strongly of the opinion that we shall probably find, if we are going to be at all reasonable, that we shall have to go back to the old policy of equal economic opportunity which we maintained for many generations. I have here a copy of the very famous utterance of Mr. Joseph Chamberlain in which he pointed out how different we were from any other country in the world, how we acted as trustee for the native inhabitants and how we imposed no barriers of any preferential kind against the sale of goods by any foreign countries in our Colonies. He could not have made that speech today. So long as we maintained that policy we had a great British Empire, as great as now, practically without any challenge or complaint from the rest of the world, and we shall probably have to

go back to it. It is because our power of doing so is prohibited for three years by this Agreement that I raise the point.

7.40 p.m.

Sir Joseph Nall: The right hon. Gentleman has spoken as if the improvement in world trade and particularly our share of it has come upon us without our taking any action such as we have taken in recent years to stimulate recovery. If there is one thing clear surely it is that our improved commercial position in the world to-day is consequent upon the changes we have made in our fiscal system and the agreements that we have made not only with the Empire but with foreign countries. I think it is deplorable at the present time to talk about the removal of trade barriers and reverting to the former system of free and open markets and even to be contemplating that as a possibility. Hon. Members who speak in that way obviously entirely forget the lesson of rearmament. The right hon. Gentleman has hinted that he would re-open the disarmament discussion and throw away once more our position of security in the world at large. They also forget the lessons that we had to learn in the field of national defence, and they are asking us to ignore it in the field of trade defence. Representing as some of us do a part of the country which at long last is beginning to feel some small results from the trade agreements that have been made and the international bargains which we are now able to conclude, I enter my protest most strongly against any suggestion that we should relax our efforts in maintaining our trade defences and if necessary still further extending them, or that we should weaken our Imperial nationalism.

7.43 P.m.

Sir A. Sinclair: I approach this agreement with a very different feeling from that with which I approached the Ottawa Agreements. The Ottawa Agreements were the principal subjects of controversy in the general election which took place in Canada a year ago, when Mr. Bennett and Mr, MacKenzie King both declared that the result of the election would show what the Canadian people thought about the Ottawa Agreements. Mr. Bennett said that before the election took place and Mr. MacKenzie King used those words after the election. Mr. Dunning, in commending this


Agreement to the House, drew attention to the ways in which it differed from the Ottawa Agreements and said in particular that the improvements that had been made in this Agreement as compared with the Ottawa Agreements would enable adjustments to be made as between the economic systems of Empire countries and those of foreign countries outside. In so far as this Agreement is a remarkable step in advance from the Ottawa Agreements I appreciate it, and I feel sure that if we had had in this country a Government of a complexion similar to that of the Canadian Government it would have been a very much better Agreement.
We are faced at the present time with a very important decision which has to be made in economics and world politics. The hon. Member for Hulme (Sir J. Nall) declared that our improved position is consequent on the adoption by this country of protection and preference. That is an opinion which he shares with a great many other hon. Members, but it is an opinion which I strongly oppose.

Sir J. Nall: The right hon. Gentleman cannot dispute the sequence of events.

Sir A. Sinclair: No more than the hon. Member can dispute the fact that the greatest increase in prosperity in this country was under Free Trade. If we go into that question I am afraid we shall be involved in trouble with the Chairman, but on any suitable occasion I shall be delighted to meet the hon. Member in argument on that general proposition. When he went on to say that in deciding our attitude we should draw upon the lessons of rearmament, I was not quite sure what he meant. The most obvious lesson of rearmament, as we have always prophesied since the Ottawa Agreements were made is that the effect of treating trade as a means of national aggrandisement, excluding foreign countries from our Colonial Empire, must inevitably be an intensification of foreign rivalries, hostilities, suspicion and envy. Our prophecy has been justified. These economic weapons of tariffs and quotas have inevitably bred the more terrible military armaments of battleships, tanks and bombs. The lesson is that rearmament is a direct consequence of the policy of economic Imperialism, upon which we embarked at Ottawa. Now we

have an opportunity of changing that policy.
Unfortunately I cannot quote the exact words of Mr. Dunning in the Canadian Parliament—his speech appears in the "Times"—but he said that we should now have an opportunity of adjusting the system of Imperial Preference to the needs of wider agreements with the world outside. At the present moment there is so much encouragement for the idea of taking down the barriers between nations and restoring a greater measure of trade and intercourse, that we think His Majesty's Government should lend the whole weight of its authority to the movement. Mr. Cordell Hull, President Roosevelt and the United States Ambassadors in this country and in France have shown in their speeches how much importance the American Government attach to this movement. Dr. Schacht has said that Germany is only reluctantly following the path of autarchy and Germany would prefer to follow the same path. The Oslo countries, including Finland, Holland, Belgium and Luxembourg, have already advanced a substantial way along that path, and all the American countries, North and South America, at Monte Video last autumn, strongly supported the lead which Mr. Cordell Hull gave them towards economic disarmament.

The Chairman: I have a recollection of hearing these same words used on the previous Clause. I think we must not repeat the debate on the previous Clause.

Sir A. Sinclair: I was attempting to depict the choice before us. We are faced at this moment with a grave choice between intensifying the policy of economic Imperialism or taking advantage of the movement towards freer trade which is now springing up spontaneously in so many countries. In the past Ministers have told us that we would take down our tariffs if other countries would do the same. I am saying that other countries are beginning to go along that path, and I am urging the Government to co-operate in that policy.

Mr. Crossley: Over and over again the right hon. Gentleman in these Debates has made certain vague remarks about Mr. Cordell Hull and President Roosevelt, but I have never seen anything of any kind which could possibly be called a specifie suggestion or offer. What is it that the


right hon. Gentleman is referring to all the time as these great gestures on the part of the United States? It there anything in them really?

Sir A. Sinclair: Of course there is, if the hon. Member had studied these speeches. Of course there is no specific offer. Offers are not made in that way. You do not make specific proposals for a reduction in tariff schedules in speeches. That is not the way in which these negotiations are conducted. You do not get down to concrete terms until you get round a table. But short of any specific offer, may I refer him to the Resolution of the Monte Video Conference, at which all the American nations including the United States were represented, and which makes it apparent that these nations are not only prepared to go as far as we are along the line of economic appeasement but that they consider it is the only way of achieveing military as well as economic disarmament and averting the risk of war?
If the hon. Member wishes to have the opinion of an Imperial statesman, I would refer him to General Smuts, who has made speeches in exactly the same terms. To anyone who has followed the speeches which have been made there is no doubt that these nations are aghast at the prospect which faces us if we continue on our present lines, aghast at the prospect of a recurrence of the slump to which the President of the Board of Trade referred only a fortnight ago, and aghast at that fear of renewed slump to which our attention is directed by a very important letter to the "Times" to-day, signed by some of the greatest economists in the country, of unimpeachable authority and impartiality. All over the world people are beginning to be convinced that unless we can restore overseas trade we shall be faced with a slump, with still heavier armaments and with the catastrophe of war.

Captain Strickland: Does the right hon. Gentleman assert that the slump of 1931 was caused by our tariff policy?

The Chairman: I think I can help the right hon. Baronet on that question. I really do not think I can allow the question of the Clause standing part, putting a new agreement in place of the old Ottawa Agreements, to be the basis for a general discussion on economic world policy.

Captain Strickland: I only raised the point because it was raised by the right hon. Member, who asserted and was not stopped that a cause of the slump was the tariff system.

The Chairman: If I have failed perhaps in the past, I think I must now retrieve my failure.

Sir A. Sinclair: I did not say that tariffs were the cause of the slump in 1931, although they contributed greatly to it. I was pointing out the opportunity with which we are faced, the great choice we have to make. The difficulty which this agreement presents is that although it is a great improvement on the Ottawa Agreement, it still contains two vicious principles which may make agreements with foreign countries difficult. One is the guaranteed margin of preference and the other is the closing of the Colonial door. Those are two things which make me unhappy regarding this agreement, and if the issue is challenged I object so strongly to these two principles that I shall be compelled to vote against the agreement on those two grounds. I hope the Government, however, will succeed in persuading the Canadian Government, which on its public form one would certainly suppose to be anxious to facilitate an arrangement between this country and Canada and the United States and I hope with every Dominion country for an increase in trade and a reduction of tariff barriers; one would have thought that they would be anxious to facilitate such an arrangement, and I hope that this agreement, although it has these objectionable features, will not prove in practice to be a bar to the conclusion of a wider agreement. Nevertheless I am so opposed to these principles that if a Division is called I shall certainly vote against the Clause.

7.56 p.m.

Mr. Boothby: Let me say one word in reply to the speech of the right hon. Member for Caithness (Sir A. Sinclair). There is a concensus of opinion that an agreement between this country and the United States is perhaps the most desirable thing that could happen in the world to-day, and we are all anxious that nothing shall be done, that no Clause shall be passed which would militate against such an agreement. I am not satisfied, and I do not think the right hon. Gentleman said anything to convince the Com-


mittee, that there is anything in this Clause to prevent such an agreement being signed. 1 would remind the right hon. Gentleman that as far as the British Empire is concerned our interests are immensely bound up with those of the United States. It is just as important to our Dominions to get a solution of the gold problem as it is to the United States; it is just as important for the Dominions to see the commodity price level maintained as it is to the United States. All these questions vitally affect us all, and there are many hon. Members who, whilst supporting the principle of Imperial Preference, feel that at the same time there can be no ultimate solution of any of these larger problems, which affect the Dominions just as much as the United States, unless there is some economic agreement covering not merely a reduction in tariffs, but covering the price level, the position of gold and currency as well.
I think it would be most unfortunate if it went out that there was a great body of opinion in this country opposed in principle to any agreement being arrived at with the United States. On the contrary, there is a great body of opinion which thinks that it would be in the best interests of this country and of the Dominions themselves. There is a large body of opinion supporting that view, and all we want is an assurance from the Government that we are not going to pass anything in the Bill which will in itself make the conclusion of such an agreement more difficult.

8.0 p.m.

Major Hills: The right hon. Member for Caithness (Sir A. Sinclair) will forgive me if I point out that his speeches, in my opinion, do not help in the formation of opinion which would support an agreement with the United States. I want to see an agreement with the United States, and when the right hon. Gentleman referred to the old Free Trade policy before 1932, I must say that I do not want to see a reversion to the position which existed before that year. The one thing which I think might remove or lessen the possibility of an agreement with the United States would be the idea that it was the beginning of a policy of opening the door wider and returning to Free Trade as it existed before. The right hon. Gentleman the Member for Caithness may smile, but I am sincere

when I say that I want an agreement with the United States.

Sir A. Sinclair: If that agreement did not open the door wider, of what use would it be?

Major Hills: Surely the right hon. Gentleman will agree with me that an agreement between two countries is a different thing from opening the door wide to the world. May I also ask the right hon. Gentleman from where he gets proof of the idea that economic nationalism is a cause of war, and why he links the economic question with the peace question? I do not believe they have any connection, and I am certain that talk of an economic settlement in Europe before a political settlement has been achieved is useless. My main purpose in speaking was to point out to the right hon. Gentleman the Member for Caithness that he will set many people of my way of thought against the idea of an agreement with the United States of America if he urges that that should be the first step in a general reversion to Free Trade as it existed before 1932.

8.2 p.m.

Sir Walter Smiles: The good which the Government have done is very often quickly forgotten. As one who represents a textile constituency, I wish to place on record our gratefulness for the tariff policy pursued by the Government. When one sees 10 or 12 cotton mills opening and far more people going to work, one wonders where the good came from, and there can be no doubt that the trade agreements which the Government have concluded with foreign countries and the preferential tariffs for the Dominions have done a very great deal of good to Lancashire. The right hon. Gentleman who spoke for the Opposition, in mentioning German trade with the Colonies, seems to have forgotten that there is a very large Free Trade area in our Colonies and Protectorates, the area covered by the Congo Basin Treaties. Many of us would like our cotton goods to go in there under a preferential tariff, but we appreciate that they cannot. We also recognise the fact that in many of the Colonies on the East Coast of Africa, Germany has imported far more in manufactured goods than she has taken from them in exports.

The Chairman: The hon. Member is getting a little wide of the question of the substitution of one agreement with Canada for another.

Sir W. Smiles: I was trying to answer some of the arguments put forward by other hon. Members, but I will conclude by reminding hon. Members, with reference to the remarks which have been made about an economic understanding with the United States of America, that at the World Economic Conference in London, it was the United States which torpedoed the arrangements on the very first day of the conference. Perhaps the tariff policy which we are now pursuing his led them to desire an agreement with us.

8.5 p.m.

Mr. C. Brown: I do not intend to enter into a discussion of the questions of high policy which have been raised in the Debate, but simply to ask the Minister a question with regard to Sub-section (3) of Clause 3, in which there is a reference to
stockings or socks made wholly of silk or containing silk components.
I wish to know whether these proposals will adversely or beneficially affect my constituents, and I should be obliged if the Minister who replies would tell me what changes, if any, are being made with regard to preferences to Canada in connection with the sending of silk stockings into this country. I know that I could find that information myself by looking up the necessary references, but it would be far better if the Minister would give it to me.

8.7 p.m.

Mr. Kingsley Griffith: In discussing trade agreements with the Dominions or their effect on agreements with other countries, we must start from the proposition that none of these agreements fulfils the purpose for which it is embarked upon unless it results in a lowering of tariffs. That is a very elementary proposition, but one which does not seem to be generally accepted. The advantage of hearing three speeches in succession from the benches opposite was that it enabled one to grasp the very wide divergence of opinion among hon. Members of the Conservative party. The hon. Member for East Aberdeen (Mr. Boothby) seemed, on the whole, to be

an opener of doors, at any rate within reasonable limits. As far as the United States is concerned, he wanted to see them opened. The right hon. Gentleman the Member for Ripon (Major Hills) seemed to be a slammer of doors, and that is the only way in which one can describe him. The hon. Member for Hulme (Sir J. Nall) wanted to keep the doors firmly ajar, neither one thing nor the other.

Mr. Boothby: The hon. Member has now discovered the secret of why we always win General Elections.

Mr. Griffith: Exactly. I wish now to discover whether the policy adumbrated by the hon. Member for Hulme represents the policy of His Majesty's Government, and I hope that the Minister who replies will address himself to that matter. The hon. Member for Hulme said that talk of the removal of tariff barriers is deplorable, and he wanted that talk to cease. If that be the case the foundation is taken away from a great many eloquent speeches addressed to the world by the representatives of His Majesty's Government, who have generally said that the Government are in favour of removing tariff barriers, but have given it firmly to be understood that they must be other people's barriers in the first place. That is a possible proposition, but it is a very different one from that enunciated by the hon. Member for Hulme. It is my fear that the remarks of the hon. Member for Hulme really represent the views of a majority of the supporters of the Government that leads me to pay very grave attention to them. I am very much afraid that in this matter, in the end, the tail may wag the dog, and that the influence will permeate from the hack benches to the Front Bench. I do not know who will reply to the Debate for the Government, but I had rather hoped that it would be the Chancellor of the Exchequer. After all, the tariff policy of this country is one of the charges of the Chancellor of the Exchequer, and he cannot evade that fact. Although the right lion. Gentleman has made one short and non-committal speech to-day with regard to an Amendment which, as the result of a Ruling from the Chair, was withdrawn, he has not contributed to our wisdom on this very important question in any respect.

The Deputy-Chairman: I must point out to the hon. Member that this Clause simply deals with the substitution of one agreement with Canada for another, and that is not a peg on which he can hang the entire tariff argument.

Mr. Griffith: I am not trying to pursue the entire tariff argument, but the tariff argument does impinge upon the question of how we are to regard this particular agreement, how much good we find in it, and how much bad. I cannot divorce the discussion of this agreement altogether from the general tariff policy. I submit that the attitude of the Committee to this particular agreement must be largely affected by whether it takes the attitude of the hon. Member for East Aberdeen or that of the hon. Member for Hulme, and it is for that reason that I have called attention to the views expressed in those speeches and have paid a great deal of attention to them. I should pay still more attention and place much more importance on the views of the Chancellor of the Exchequer, if I knew what they were. I agree that it would be very embarrassing for the Chancellor of the Exchequer to deal with a matter such as this, but it will be very difficult for us if he goes into cold storage, as it were, whenever acute matters of fiscal controversy are raised, as they are on this question. If it turns out that the right hon. Gentleman is maintaining a moderating influence in the Cabinet, and preventing views such as those of the hon. Member for Hulme from ruling the day, I shall be relieved to hear it, but I should like to hear it from the right hon. Gentleman himself. I am watching the Chancellor of the Exchequer with an almost pathological interest, because I remember how previous Chancellors of the Exchequer, the right hon. Gentleman the Member for Epping (Mr. Churchill), for instance, gradually sank and abandoned every one of their fiscal views, except the principle, and finally appeared to abandon that. I would like to know how far mortification has set in in the case of the present Chancellor of the Exchequer, and I hope that at some time we may be able to discover that.

8.12 p.m.

Mr. Bellenģer: Obviously it would be out of order to discuss the whole tariff position, but unfortunately there are

many hon. Members on this side of the Committee, and perhaps in other parts as well, who think, perhaps justifiably, that the Canadian Agreement prejudices the whole position of British trade, inter-Imperial and international. There is one matter on which we ask that the Government should give us an indication. Although we know that there are certain features of the Canadian Agreement, and the Ottawa Agreements as well, which have undoubtedly helped to increase the volume of trade between this country and the Ottawa countries, we also know that there are still 1,500,000 unemployed in this country, and it is that with which we are concerned. We wish to take the long view. We know that, although the agreements which we are discussing may have helped in some small part to increase the volume of trade between this country and Canada and the other Dominions, that is only a small part of the whole problem. It is obvious that the Government sees that, because they, in conjunction with the French Government, have invited the Prime Minister of Belgium to try to produce evidence that we could increase the volume of our trade. All we are asking for is a statement of Government policy in relation both to Imperial agreements, such as the Canadian Agreement, and the whole problem of international trade.

8.15 p.m.

Mr. R. S. Hudson: Before I deal with the speech of the right hon. Gentleman the Member for Keighley (Mr. Lees-Smith) may I answer a specific question put to me by the hon. Member for Mansfield (Mr. C. Brown)? He asked me how this agreement would affect his own constituency. I am afraid I cannot predict what the effect will be on his constituency, but I can tell him that the result of the agreement is to reduce the duty on these silk stockings from five-sixths to two-thirds of the standard rate.

Mr. C. Brown: It will be easier for them to come in now.

Mr. Hudson: That is doubtless true and it may also be that it will result in the hon. Member's constituency having to meet rather keener competition than it has had to meet in the past, but I have no doubt that, as a convinced Free Trader, the hon. Member welcomes that prospect.

Mr. Brown: The hon. Gentleman is making a mistake. I am not a convinced Free Trader.

Mr. Hudson: If the hon. Member is not a Free Trader then, no doubt, he will vote in favour of this agreement for Imperial Preference. The right hon. Gentleman the Member for Keighley (Mr. Lees-Smith) said that on the whole he thought this agreement an improvement on the previous agreement, and I was glad to hear that he approved to that extent of the work which we have been able to do in this matter. I do not wish to go over the details which were given by the former President of the Board of Trade, during the Debate on the Financial Resolution. I would only invite the Committee to note that the effect of the first Ottawa Agreement was to raise the total value of trade between this country and Canada from £59,000,000 in 1932, to £98,000,000 last year. That represents a considerable improvement on the conditions of four years ago and if, as the right hon. Gentleman opposite said, the new agreement is even better than the first Ottawa Agreement, I hope we shall be able to look forward to an even greater increase in the ensuing four years.

Sir A. Sinclair: Does the hon. Gentleman really tell the Committee that the increase which he has just mentioned was the effect of the Ottawa Agreement?

Mr. Hudson: I think undoubtedly the agreement helped considerably to foster that increase. The proof of that is to be found in the fact that whereas our trade has increased, taking the world as a whole, no less than 80 per cent. of that increase is with the countries which come within the Trade Agreements. Therefore we are entitled to say that those agreements must have played a considerable part in the increase in trade.
The right hon. Gentleman the Member for Keighley was worried in one respect about this agreement. He suggested that we had prohibited ourselves in advance by it for three years from making arrangements with other countries. As my right hon. Friend the Chancellor of the Exchequer explained earlier, that is not quite accurate, because Article 16 of the agreement specifically provides that in the event of changed circumstances, it shall be open to the two Governments con-

cerned to consult together and to see what variations may be required in the agreement. The article provides that,
in the event of circumstances a rising which in the judgment of the Government of the United Kingdom or of the Government of Canada, as the case may be, necessitate a variation in the terms of this Agreement, the proposal to vary those terms shall be the subject of consultation between the two Governments.

Mr. Holdsworth: But would it not be open to the Canadian Government under that Article to say "We cannot agree that there shall be any variation in the agreement, even though circumstances may have changed"?

Mr. Hudson: I propose to deal with that argument in a moment. The right hon. Gentleman the Member for Keighley went on to express the fear that however prosperous the country may be now, we ought to be considering what will happen in two or three years time when the boom comes to an end and we enter on a period of depression. I have never admitted that alternations between trade booms and trade depressions result from an Act of God. I think they are more likely to result from the folly of man. Whether or not it will be possible to overcome that folly and to take steps in advance to prevent it developing, is another matter. It is precisely because we believe that it is necessary to foresee that folly and that the best method of preventing its consequences is to develop trade throughout the world, to increase the total volume of trade, that we are making these proposals.
Reference has been made to the possibility of getting an agreement with the United States. It seems to me that there would be no real advantage in getting an agreement with the United States, if it merely meant diverting some of the existing quantum of trade from one country to another. The whole essence of our policy, in trying to get this agreement, is to see whether we cannot increase the total volume of trade. Thus there is no real difference between the policy of Imperial Preference and the policy of trade agreements in that respect. That is also the answer to the hon. Member for South Bradford (Mr. Holdsworth). If it were made clear to the Canadian Government, in the next year or in the next few months, that there was a possibility, not of merely diverting a certain amount of trade from one country to another, but


of increasing the total volume of trade in which we should all have a share, it is difficult to believe that that Government, especially in view of their record as shown in the existing agreement, would refuse to meet us in the manner suggested.
The essence of the existing agreement is that it does provide for a substantial increase in trade. Mr. Runciman (as he then was) gave a list of the articles on which the Canadian Government had re-

duced the duties and a list of articles on which they promised not to increase the duties. Those lists represent a very considerable improvement and an important step along the road which we all wish to follow, namely, that of reducing trade barriers. For those reasons I hope the Committee will agree to the Clause.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 198; Noes, 130.

Division No. 210.]
AYES.
[8.22 p.m.


Acland-Troyte, Lt.-Col. G. J.
Frcmantle, Sir F. E
Mellor. Sir J. S. P. (Tamworth)


Adams, S. V. T. (Leeds, W.)
Ganzoni, Sir J.
Mills, Major J. D. (New Forest)


Albery, Sir Irving
Gibson, Sir C. G. (Pudsey and Otley)
Moore, Lieut.-Col. Sir T. C. R.


Allen, Col. J. Sandeman (B'knhead)
Gledhill, G.
Moreing, A. C.


Anstruther-Gray, W. J.
Gluckstein, L. H.
Morrison, G. A. (Scottish Univ's.)


Atholl, Duchess of
Goodman, Col. A. W.
Nail, Sir J.


Baillie, Sir A. W. M.
Gower, Sir R. V.
Nicolson, Hon. H. G.


Balfour, G. (Hampstead)
Grattan-Doyle, Sir N.
Orr-Ewing, I. L.


Balfour, Capt. H. H. (Isle of Thanet)
Gretton, Col. Rt. Hon. J.
Palmer, G. E. H.


Balniel, Lord
Gridley, Sir A. B.
Peake, O.


Barrie, Sir C. C.
Grimston, R. V.
Perkins, W. R. D.


Baxter, A. Beverley
Gritten, W. G. Howard
Petherick, M.


Beamish, Roar-Admiral T. P. H.
Guest, Maj. Hon. O. (C'mb'rw'll, N.W.)
Pickthorn, K. W. M.


Beauchamp, Sir B. C.
Guinness, T. L. E. B.
Porritt, R. W.


Beit, Sir A. L.
Gunston, Capt. D. W.
Power, Sir J. C.


Birchall, Sir J. D.
Guy, J. C. M.
Pownall, Lt.-Col. Sir Assheton


Bird, Sir R. B.
Hacking, Rt. Hon. D. H.
Procter, Major H. A.


Blair, Sir R.
Hannah, I. C.
Radford, E. A.


Blaker, Sir R.
Hannon, Sir P. J. H.
Raikes, H. V. A. M.


Boothby, R. J. G.
Harbord, A.
Ramsden, Sir E.


Bossom, A. C.
Haslam, H. C. (Horncastle)
Rankin, Sir R.


Bower, Comdr. R. T.
Haslam, Sir J. (Bolton)
Rathbone, J. R. (Bodmin)


Boyce, H. Leslie
Heilgers, Captain F. F. A.
Rawson, Sir Cooper


Briscoe, Capt. R. G.
Heneage, Lieut.-Colonel A. P.
Rayner, Major R. H.


Brown, Col. D. C. (Hexham)
Hepburn, P. G. T. Buchan-
Reed, A. C. (Exeter)


Bull, B. B.
Herbert, Major J. A. (Monmouth)
Reid, Sir D. D. (Down)


Bullock, Capt. M.
Higgs, W. F.
Rickards, G. W. (Skioton)


Burton, Col. H. W.
Hills, Major Rt. Hon. J. W. (Ripon)
Ropner, Colonel L.


Carver, Major W. H.
Holmes, J. S.
Ross Taylor, W. (Woodbridge)


Cary, R. A.
Hopkinson, A.
Rowlands, G.


Cayzer, Sir H. R. (Portsmouth, S.)
Horsbrugh, Florence
Salmon, Sir I.


Channon, H.
Hudson, Capt. A. U. M. (Hack., N.)
Salt, E. W.


Christie, J. A.
Hudson, R. S. (Southport)
Samuel, M. R. A.


Clarke, F. E. (Dartford)
Hume, Sir G. H.
Selley, H. R.


Clarke, Lt.-Col. R. S. (E. Grinsteao)
James, Wing-Commander A. W. H.
Shakespeare, G. H.


Clarry, Sir Reginald
Joel, D. J. B.
Shaw, Major P. S. (Wavertree)


Cobb, Captain E. C. (Preston)
Jones, Sir G. W. H. (S'k N'w'gt'n)
Shute, Colonel Sir J. J.


Colfox, Major W. P.
Keeling, E. H.
Simmonds, O. E.


Colville, Lt.-Col. Rt. Hon. D. J.
Kerr, Colonel C. I. (Montrose)
Simon, Rt. Hon. Sir J. A.


Cooke, J. D. (Hammersmith, S.)
Kerr, J. Graham (Scottish Univs.)
Smiles, Lieut.-Colonel Sir W. D.


Cooper, Rt. Hn. T. M. (E'nburgh, W.)
Kimball, L.
Smith, Bracewell (Dulwich)


Cox, H. B. T.
Knox, Major-General Sir A. W. F.
Smith, L. W. (Hallam)


Craven-Ellis, W.
Lamb, Sir J. Q.
Somerville, A. A. (Windsor)


Critchley, A.
Lees-Jones, J.
Southby, Commander Sir A. R. J.


Crooke, J. S.
Levy, T.
Stanley, Rt. Hon. Oliver (W'm'l'd)


Cross, R. H.
Lewis, O.
Stourton, Major Hon. J. J.


Crossley, A. C.
Liddall, W. S.
Strauss, E. A. (Southward, N.)


Crowder, J. F. E.
little, Sir E. Graham-
Strauss, H. G. (Norwich)


Cruddas, Col. B.
Llewellin, Lieut.-Col. J. J.
Strickland, Captain W. F.


De Chair, S. S.
Lloyd, G. W.
Stuart, Hon. J. (Moray and Nairn)


Ds enman, Hon. R. D.
Locker-Lampson, Comdr. O. S.
Tasker, Sir R. I.


Denville, Alfred
Lovat-Fraser, J. A.
Taylor, C. S. (Eastbourne)


Doland, G. F.
Mabane, W. (Hudderafield)
Taylor, Vice-Adm. E. A. (Padd., S.)


Donner, P. W.
MacAndrew, Colonel Sir C. G.
Thomson, Sir J. D. W.


Dower, Major A. V. G.
MacDonald, Rt. Hon. M. (Ross)
Touche, G. C.


Duggan, H. J.
MacDonald, Sir Murdoch (Inverness)
Train, Sir J.


Duncan, J. A. L.
Macdonald, Capt. P. (Isle of Wight)
Tree, A. R. L. F.


Eastwood, J. F.
Magnay, T.
Turton, R. H.


Edmondson, Major Sir J.
Makins, Brig.-Gen. E.
Wakefield, W. W.


Ellis, Sir G.
Manningham-Buller, Sir M.
Wardlaw-Milne, Sir J. s.


Emery, J. F.
Margesson, Capt. Rt. Hon. H. D. R.
Waterhouse, Captain C.


Emmott, C. E. G. C.
Markham, S. F.
Wedderburn, H. J. S.


Errington, E.
Mayhew, Lt.-Col. J.
Wells, S. R.


Erskine-Hill, A. G.
Meller, Sir R. J. (Mitcham)
Willoughby de Eresby, Lord




Winterton, Rt. Hon. Earl
Womersley, Sir W. J.
Wright, Squadron-Leader J. A. C.


Wise, A. R.
Wood, Hon. C. I. C.



Withers, Sir J. J.
Wragg, H.
TELLERS FOR THE AYES.—




Captain Dugdale and Mr. Munro.




NOES.


Acland, Rt. Hon. Sir F, Dyke
Griffiths, J. (Llanelly)
Parker, J.


Adams, D. (Consett)
Hall, J. H. (Whitechapel)
Parkinson, J. A.


Adams, D. M. (Poplar, S.)
Harvey, T. E. (Eng. Univ's.)
Price, M. P.


Adamson, W. M.
Henderson, A. (Kingswinford)
Pritt, D. N.


Alexander, Rt. Hon. A. V. (H'lsbr.)
Henderson, J. (Ardwick)
Quibell, D. J. K.


Amnion, C. G.
Henderson, T. (Tradeston)
Richards, R. (Wrexham)


Barnes, A. J.
Hills, A. (Pontefract)
Ridley, G.


Barr, J.
Holdsworth, H.
Riley, B.


Batey, J.
Hopkin, D.
Ritson, J.


Bellenger, F. J.
Jenkins, A. (Pontypool)
Roberts, Rt. Hon. F. O. (W. Brom.)


Benn, Rt. Hon. w. W.
Jenkins, Sir W. (Neath)
Roberts, W. (Cumberland, N.)


Broad, F. A.
Johnston, Rt. Hon. T.
Rowson, G.


Bromfield, W.
Jones, A. C. (Shipley)
Sanders, W. S.


Brown, C. (Mansfield)
Jones, Sir H. Haydn (Merioneth)
Sexton. T. M.


Brown, Rt. Hon. J, (S. Ayrshire)
Jones, Morgan (Caerphilly)
Short, A.


Burke, W. A.
Kelly, W. T.
Silverman, S. S.


Charleton, H. C.
Kennedy, Rt. Hon. T.
Simpson, F. B.


Cluse, W. S.
Kirby, B. V.
Sinclair, Rt. Hon. Sir A. (C'thn's)


Clynes, Rt. Hon. J. R.
Lathan, G.
Smith, E. (Stoke)


Cocks, F. S.
Lawson, J. J.
Smith, Rt. Hon. H. B. Lees- (K'ly)


Cove, W. G.
Leach, W.
Smith, T. (Normanton)


Cripps, Hon. Sir Stafford
Lee, F.
Sorensen, R. W.


Daggar, G.
Leonard, W.
Stephen, C.


Dalton, H.
Leslie, J. R.
Stewart, W. J. (H'ght'n-le-Sp'ng)


Davidson, J. J. (Maryhill)
Logan, D. G.
Strauss, G. R. (Lambeth, N.)


Davies, R. J. (Westhoughton)
Lunn, W.
Taylor, R, J. (Morpeth)


Davies, S. O. (Merthyr)
Macdonald, G. (Ince)
Thorne, W.


Dunn, E. (Rother Valley)
McEntee, V. La T.
Thurtle, E.


Ede, J. C.
McGhee, H. G.
Tinker, J. J.


Edwards, Sir C. (Bedwellty)
McGovern, J.
Viant, S. P.


Evans, D. O. (Cardigan)
MacLaren, A.
Walkden, A. G.


Evans, E. (Univ. of Wales)
Maclean, N.
Walker, J.


Fletcher, Lt.-Comdr. R. T. H.
Marshall, F.
Watson, W. McL.


Foot, D. M.
Mathers, G.
Welsh, J. C.


Frankel, D.
Maxton, J.
Westwood, J.


Gallacher, W.
Montague, F.
White, H. Graham


Gardner, B. W.
Morrison, R. C. (Tottenham, N.)
Williams, D. (Swansea, E.)


George, Major G. Lloyd (Pembroke)
Muff, G.
Williams, E. J. (Ogmore)


George, Megan Lloyd (Anglesey)
Nathan, Colonel H. L.
Williams, T. (Don Valley)


Gibbins, J.
Naylor, T. E.
Windsor, W. (Hull, C.)


Gibson, R. (Greenock)
Noel-Baker, P. J.
Woods, G. S. (Finsbury)


Green, W. H. (Deptford)
Oliver, G. H.
Young, Sir R. (Newton)


Griffith, F. Kingsley (M'ddl'sbro, W.)
Owen, Major G.



Griffiths, G. A. (Hemsworth)
Paling, W.
TELLERS FOR THE NOES.—




Mr. Whiteley and Mr. Groves.


Question, "That the Clause stand part of the Bill," put, and agreed to.

CLAUSE 4.—(Provisions as to exemption of sculptures, etc., from import duties.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

8.32 p.m.

Mr. Crossley: There is a very brief question that I wish to ask my right hon. Friend about this Clause. It is, I understand, a Clause which will enable the Treasury to help those people who may wish to bring sculpture and so on into this country for the purposes of public exihibition, and it will enable the Treasury to lay down a condition attached to an order by which one of the keepers of the national galleries or museums will inspect these works of art and issue a certificate in respect of them as being works of art. I know that the great difficulty is to distinguish between monumental sculpture, where it is quite right that there should

be a duty, and works of art, which I thing the consensus of opinion in the Committee would regard it as undesirable to tax, but I want to know whether this provision will enable the Treasury to do anything for those artists who, because of the uncongeniality of the British climate, choose to go out of England during the winter months and bring back with them in the springtime their own works of art, and who at the present moment are liable to be taxed, and often are taxed, on what is often an entirely speculative value and might never even be sold. I may be partly under a misapprehension in this matter, but I ask for purposes of information.

8.34 p.m.

Lieut.-Colonel Colville: Before I answer the question put to me by my hon. Friend the Member for Stretford (Mr. Crossley), I should like to give a brief word of explanation of this Clause. It is designed


to allow the admission into this country, free of duty, of certain classes of works of art, in particular sculptures and etchings, which it has not been found possible to deal with under existing legislation. Apart from the general considerations in favour of generous treatment for works of art, this proposal will be welcomed by British artists who produce works abroad and bring or send them home. That, I think, meets the point raised by my hon. Friend, with the proviso that they have to be genuine works of art approved as such by the director of a museum specified in the Order. Not only will artists abroad benefit, but dealers in this country are in favour of this proposal, and artists in this country, who, it might be argued, might suffer from increased competition by the import of these works of art, have not objected and are, generally speaking, in favour of it.
The procedure contemplated under the Clause is that the Treasury, upon a recommendation from the Import Duties Advisory Committee, shall make an order under the Import Duties Act, 1932, which will provide that certain works of art can be exempted from a duty if, and only if, they are given a certificate by or on behalf of the director of a museum or gallery specified in the Order. There is a provision to pay any expenses incurred by the director of the museum or gallery when engaged on this work, and a Resolution was passed by the House for that purpose. It is not anticipated that the expenses will exceed £100 a year. I hope that the Committee will agree that this proposal is a wise one. It has the approval of all the parties concerned.

8.37 p.m.

Mr. Thurtle: Do I understand the Financial Secretary aright in saying that British artists may go to Italy, a country which is governed by Mussolini, may live there for a large part of the year, spend a great deal of money in that country and assist in its prosperity, and then come back to this country, bring the works of art which they have produced during their period of residence in Italy, and sell those works of art in competition with British artists who are living here all the time and contributing to the upkeep of the services of this country? If that is so, this Clause has an undesirable aspect.

8.38 p.m.

Mr. MacLaren: I cannot understand what my hon. Friend means. I cannot imagine an artist squandering his money in Italy or anywhere else, for most artists I know have not any money to squander. Most artists who go abroad are a liability on those who send them. I am glad that this Clause has been put in because of the amazing situation which arises in connection with students who go abroad. They go, say, to Rome, and they must of necessity do their sculpture and bronze casting in the studios there. They have found that when they come home with their works of art they are met by a barrage of Customs and Excise Duties. This Clause will do away with the strange anomaly of people paid by the State, as they are, because many of these students are paid for out of public funds, going abroad and not being able to bring their works back into this country unless they pay Customs Duties. There is one difficulty which, I hope, will be met. These pupils often come back with little or no money, and I hope that they will not be put to any expense in the examination of their works for the purposes of this Clause. Will it be within the discretion of the curators who examine the works to define what is a work of art? I hope that the Government will give them a wide field in deciding what a work of art is, because in these days of modern art it is a wide field. I hope, too, that they will act as expeditiously as possible in allowing works of art to be transferred into this country so that they will not, as heretofore, be hung up.

8.41 p.m.

Mr. David Adams: I am glad to support this Clause and I am astonished that any hon. Member should take exception to any English person living abroad to study art. The Clause is, at all events, a movement, even if it is only in the realm of art, towards the freer admission into this country of the products of a foreign country. The world is suffering very materially from the restriction of trade, and if this Clause means that the outlook of the Government in this direction is being relaxed, we are very grateful for it. I hope that we shall have much less parochialism in outlook with regard to travel or study abroad. I have found that complaints have been made that there are a few Italians in this country


studying here and gaining the advantage for their country and the world generally of ascertaining what we have to give in the realm of education. I hope we shall have less of that narrow outlook on this side of the Committee, at all events, where it is relatively speaking unknown.

8.43 p.m.

Lieut.-Colonel Colville: The speech of the hon. Member for Shoreditch (Mr. Thurtle) and the speech of the hon. Member for Consett (Mr. David Adams) cancel each other out. The hon. Member for Shoreditch objects to the proposal because he objects to the form of government in the country where artists sometimes go. The hon. Member for Consett takes the view, which we on this side share, that this is a desirable step. The hon. Member for Burslem (Mr. MacLaren) asked whether students returning to this country with their works of art will have to meet extra expense in connection with the examination of their works. Payment is being made from the funds of the State to meet the cost of this examination, as it would not be proper that those for whose benefit it is being undertaken should have to make some form of payment. I can reassure the hon. Member on that point.

CLAUSE 5.—(Repeal of male servant duty, and effect thereof on game licence duty.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

8.45 p.m.

Mr. Tinker: May I ask the amount which is involved in the remission of this duty?

Lieut.-Colonel Colville: I would like to say a word in explanation of the removal of this duty. It has been urged in several quarters, not only by a number of employers, but by several local employment committees. In the past the difficulty of conceding its abolition has arisen from the fact that in England and Wales the duty has formed part of the revenues of county councils and county borough councils, and the abolition would have been at their expense or they would have had to be compensated for it. They were, for the most part, unwilling to sacrifice the duty, not unnaturally. On the other hand it

would have been difficult to arrange compensation. The Chancellor of the Exchequer stated in 1934 that any review of the block grant would offer the best chance of reaching an agreement acceptable both to the Exchequer and the local authorities. That review has now taken place, and, as the Minister of Health stated in February, the new block grant includes £115,000 a year as compensation for the net loss of revenue which English local authorities will suffer when the duty is abolished. The necessary legislation making provision for this payment has already been passed. In Scotland the duty is an Exchequer duty, and therefore no question of compensating local authorities arises. The net loss to the Exchequer in Scotland is estimated at about £11,000 a year.

CLAUSE 6.—(Minimum quantity of sweets to be sold by holders of off-licences.)

Motion made, and Question proposed. "That the Clause stand part of the Bill."

8.47 P.m.

Mr. R. C. Morrison: I think the Committee are entitled to an explanation of this Clause from the Chancellor of the Exchequer. Apparently a considerable amount of mystery and secrecy surrounds it. No reference to the Clause was made in the Budget speech, or during the Second Reading Debate on the Finance Bill, and up to now there has been no word of explanation. I understand the people most affected by the proposed change were not even notified. The first information they had was when the Finance Bill was printed, and I gather that then efforts to get the Chancellor of the Exchequer to receive a deputation to protest against the change have been rebuffed. Up to now the Chancellor has not shown the readiness to receive deputations from bodies of people who object to his proposals which his predecessor showed in regard to the National Defence Contribution tax. This Clause takes away from off-licence holders a privilege which they have enjoyed for 75 years, and surely that ought not to be done without an explanation. At the present time off-licence holders are allowed to sell in open vessels or in quantities of less than a pint certain kinds of British wine which, I am told, are growing in popularity in certain of the poorer districts.


They may not be wines that appeal to the palates of hon. Members of this House, and I do not suppose that the Kitchen Committee keep any large stock of them. People who go abroad have always regarded is as a pleasant feature of life in Continental towns to see poor people sitting with their wives and children in a cafe with glasses of wine in front of them. In this country beer largely takes the place of wine, but a custom has been growing up in some of the poorer districts for the off-licence holder who supplies at the week-end one or two bottles of beer for father to supply also a sixpenny bottle of cheap wine which the mother of the family takes as a little delicacy.
For some reason which the Chancellor of the Exchequer will no doubt be able to explain, but which frankly I cannot understand, this privilege is taken away, but only from off-licence holders. People who like this cheap wine in sixpenny bottles will in future have to get it from the public house or the club, although alternatively they can still buy it from an off-licence holder if they purchase a whole pint at a time. It seems a pity to spend a great deal of time in idle speculation on why the Chancellor has inserted this Clause in the Bill. Many working people who are unable to afford port, sherry or champagne enjoy these cheap wines, and why should we drive them to public houses to get it? Why should they not still be able to go to an off-licence holder? Many people object to going into a public house. It would almost seem that there had been a conspiracy between the publicans, with the connivance of the Government, against the little man, the off-licence holder. If this privilege had been one which had been enjoyed by brewers or publicans for 75 years, and it had been proposed to take it away, the House would have been crowded this evening. Every Member would have been inundated with literature, and there would have been lobbying and deputations. I do not know of any Chancellor who would have dared to say in such a case that he would not receive a deputation. But because it is only the off-licence holder who is affected, and it concerns only cheap wine which is a little luxury of the poor, the Clause is put in without a word to anybody.

8.52 p.m.

Sir J. Simon: I was on a point of rising to give some explanation when the hon.

Member himself rose. I had expected that the Amendment on the Paper would have been moved, and that would have given an opportunity to explain. I am glad to explain this Clause, which I find in the Finance Bill which I inherited. It is capable of an easy explanation. It has to do with the holders of off-licences and therefore with a branch of the licensed trade which is strictly limited in this way: that they have privileges only for the sale of intoxicants which are to be consumed off the premises. There is no doubt that according to the law the off-licensee cannot sell wine in an open vessel or in very small quantities. The law says that wine shall be sold under an off-licence only if it be sold in a closed vessel containing one reputed pint, what is sometimes called a half-bottle. That has been the practice throughout. This Clause, however, does not deal with wine, but with something which the law rather curiously describes as "sweets" by which is meant liquor which has been made in this country—I suppose grape juice or something of the kind imported and manufactured here into what is called British wine. It also applies to mead and various other rather unusual liquors. For a long time their sale was not an important part of the business of the off-licensee, but, whether for good or evil, these liquors have become a more favoured form of refreshment. Manifestly it is inconsistent with the holding of an off-licence, a licence given to somebody on the condition that there is to be no consumption on the premises, and authorising the sale to the customer for the purpose of taking it home, to say: "You are allowed to sell sweets in an open vessel." The customer may come in with a glass and say, "Fill it." He may get it in any small quantity which he likes. That position obviously leads at once, and may very often in fact, lead to consumption on the premises. That is the reason for wishing to maintain the distinction between the off and on licence.
Sometimes that decision may be important. The figures are very interesting. The annual output of the production and sale of sweets has risen from 2,882,000 gallons in 1928–29 to 6,222,000 gallons in 1936–37. Hon. Members will see that it is completely anomalous to say to an off-licensee, "If you sell wines you must do so under conditions which properly secure that they are really consumed off


the premises," but, "You may sell any quantity, however small, of sweets, in an open container which may be brought to you." That is the explanation of this Clause. There is no mystery about it. I need hardly say that the matter was carefully considered by my predecessor and by the Department. They came to the conclusion, which I support and submit to the Committee is right, that it is not proper to allow this legal anomaly to continue to exist. It is true that the Clause will not prevent such things happening with an on-licence, but, after all, an on-licence is an authority from the State to sell liquor to be consumed on the premises. I sympathise with anybody who deals in this trade, but I think the Committee will wish to maintain the distinction, which is in the minds of magistrates and other authorities who grant on-licences, that the on-licence is for the purpose of consumption on the premises. The matter is perfectly well understood by the trade. Since I have been at the Treasury I have seen a letter written on behalf of those who are in the trade, but adding nothing whatever to the arguments which have been put. I hope the Committee will approve the inclusion of this Clause.

Mr. R. C. Morrison: I hope the right hon. Gentleman will forgive me if I ask him a further question. He says that all the arguments are against the abuse of selling wines in open vessels. If we concede that point, I suggest it might be possible to allow licence holders to sell small 6d. bottles which cannot be consumed on the premises.

Sir J. Simon: I would only say that there appears to be very great ground for making the rule which exists as regards wine apply as regards these other substances. I am not saying whether they are better or worse. Some take one view, and some another, but unquestionably they are intoxicants, and I do not see any particular reason why there should be a different standard of bottling merely because the contents of the bottle consist of these liquids rather than of wines. The Clause is put in purely for the purpose of regularising the position.

9.0 p.m.

Sir Joseph Lamb: On reading the Clause I find the words:
or, in England, in any quantity less than one reputed pint bottle.

Why not Scotland, Wales, and Northern Ireland? Is there any reason why England should be singled out?

Sir J. Simon: I agree with my hon. Friend, and I am not sure that I should not have left this to the Under-Secretary to explain. It is not for me to explain why there should be a different practice in Scotland, but the explanation is that in Scotland there has never been a restriction in the case of the sale of wines in bottle to any minimum quantity. Whether that is because Scotland deals in smaller bottles than half bottles, which are thought to be sufficient for what the human frame requires, or whether there is any other explanation, that is the fact. Suppose that you went to an on-licensed house in Scotland and asked for the smallest quantity of wine they could sell you. I understand they would sell you a quarter bottle. If that is the case with wine, it is right that it should be the case with these other liquids. In England, the minimum bottle is what is called a reputed pint bottle, and it is natural to make the standard size the same, whether we deal with wines or with sweets.

9.2 p.m.

Sir Stafford Cripps: The right hon. Gentleman has not quite tackled the point as regards the reputed pint bottle. Surely the explanation why the Clause is put in as regards wine is that the smallest size packed is the half bottle, and that if any smaller vessel were used it would be rebottled by the off-licence holder and would not be a properly bottled and sealed bottle, for instance, if he put the wine in a medicine bottle and said: "This is a bottle of wine."
As regards these sweets, of which I knew nothing until the right hon. Gentleman spoke of them, they are, in fact, put up by the producer in smaller bottles than the reputed pint bottle, as a regular article of commerce. In the other kinds of wine there is not a smaller bottle than the reputed pint bottle, but, considering that the smaller bottles have been sold for 75 years, could not the right hon. Gentleman say that where there is a regular and properly packed sealed bottle of a smaller size which is used for sweets, that bottle should be sold as the smallest packed bottle of wine is already sold? I do not think the analogy is quite true to say that because it has always been the


half bottle of wine it ought to be the half bottle of sweets. Is not the real anomaly that the smallest bottle is not put up by the producer so that you have to rebottle the thing on the premises? I suggest that the right hon. Gentleman should see whether this thing could not be extended to the smallest size bottle which is put up by the producer.

Sir J. Simon: I follow the hon. and learned Gentleman's point, and I will consider it. It is clear that the intention of the Clause is to put what are called sweets into exactly the same position, in regard to the size of the container and the sealed nature of the container, as is the case with wines. That is the purpose, and it is a limited purpose. I will certainly inquire into the point raised by the hon. and learned Gentleman.

Mr. E. J. Williams: Has the right hon. Gentleman received any computation as to the amount of labour which will be affected, if the Clause is carried?

9.5 P.m.

Mr. A. V. Alexander: I was interested to hear the right hon. Gentleman say that he would look into this matter again in the light of what has been said by my hon. and learned Friend the Member for East Bristol (Sir S. Cripps). I would, however, point out to him that it is now fairly common to buy wines, not merely in reputed pint bottles, but in what are called "splits," and I have very little doubt that, if this practice is not adopted in regard to sweets, sooner or later there will be pressure to extend to off-licence holders the privilege of being able to supply what is now a common size of pack. Whatever is done, it is necessary that there should be uniformity of treatment, and, if there is a case for leaving the position with regard to sweets where it is now, I think there is just as good a case for those people who can only afford to pay 1s. 3d. for a split bottle of wine having an equal right. I hope that, when the right hon. Gentleman is going into this matter, he will consider that point also.

9.6 p.m.

Sir J. Simon: I am not quite sure whether I have made the point plain to the right hon. Gentleman and others. I said that, as regards the off-licence, the minimum size is one reputed pint bottle.

It may well be the case that, where liquor is being sold at premises with an on-licence, where it may be consumed on the premises, it may be possible to buy a smaller quantity, but I am pretty confident that I am right in saying that at an off-licence, where one buys something to take away, the licence does not allow of the sale of a smaller quantity than a reputed pint bottle. I think the Committee will appreciate the difference. I cannot give any further assurance now, but I have stated clearly what I would do. I would like to make inquiries and see whether the suggestion of the hon. and learned Member for East Bristol (Sir S. Cripps) would lead to a useful modification, and I would ask the Committee, in the light of that assurance, to let me have the Clause.

9.7 P.m.

Colonel Gretton: The subject on which the Chancellor of the Exchequer is embarking is likely to lead to very thorny ground. In past years there have been many conflicts on this question of the size of bottles that may be sold by the off-licensed trade, and I think the right hon. Gentleman must not pay too great attention to the case put forward by the hon. and learned Member for East Bristol (Sir S. Cripps). He is dealing now with a new trade. The whole essence of the case for the alteration that is now proposed is that this new trade should be brought into line with the old and well ascertained practice. The increase in the sweets trade has been remarkable. The trade scarcely existed at the end of the War; it has grown practically entirely during the last seven or eight years to the scale which it has now reached. I have no personal interests in this matter, but I know the facts and I trust that the right hon. Gentleman will not introduce other complications in the management of the sale of wines or spirits.

9.10 p.m.

Mr. Gallagher: I am not very much concerned about these particular articles, but I am concerned about the fact that the big monopoly, or one of the big monopolies, that is prepared to soak the people of this country, is now coming forward and proposing a deliberate interference with a trade which seems to offer some competition with itself. Competition, we used to be told, was the life of trade, but here is competition which, as


has been stated by the right hon. and gallant Member for Burton (Colonel Gretton), has developed very rapidly since the War. From the character of the discussion, it is obvious that this term "sweets" applies to a very mild form of beverage, which seems to have made an appeal to the masses of the poorest people, especially in London. I do not care how bad it is; it is not any worse than the beer that we see advertised by pictures of men carrying great girders on their shoulders. It seems to me that, if any man has reached such a condition that he wants to carry a girder on his shoulder, he must be a fit subject for medical examination. The trade that has for generations menaced the people of this country is now coming forward with the object of interfering with small people who have off-licences and who supply a more attractive beverage at a more attractive price, and presumably at a lower profit.
We have heard a speech which represents, not any particular section of the people in any particular constituency in this country, but which represents one of the greatest monopolies, and a protected monopoly, in this country, against a number of people who carry on a quite legitimate business. I think that the Chancellor of the Exchequer must, if he is concerned, not with these monopolies, but with the people of the country as a whole, be prepared to repudiate the advice that comes from Bung and Company and accept the proposal of the hon. and learned Member for East Bristol (Sir S. Cripps), and go into this question of a smaller sealed vessel. It is always said that it is important to carry out the spirit of a law, and, surely, there is no question of a smaller sealed bottle in any way infringing the spirit of this Clause.

CLAUSE 7.—(Amendment as to unladen weight of goods vehicles.)

9.16 p.m.

Colonel Sandeman Allen: I beg to move, in page 6, line 26, to leave out from "description," to the end of the Sub-section, and to insert:
unless goods or burden are ordinarily carried on or in the vehicle without such receptacle being placed on or in the vehicle 

As I understand it, this Clause has been inserted in order to reverse a judgment given by the High Court of Justiciary in Edinburgh. The position appears to be that, if what is known as a container is put on a lorry, under this Clause the amount paid in licence will be considerably increased. I have taken at random for the purpose of illustration the case of a lorry weighing, say, 4 tons 5 cwts., which would pay a £70 tax. If a container weighing 1 ton 19 cwt. were put on to the lorry bringing the total weight up to 6 tons 4 cwt., the tax would be £110 instead of £70. If that lorry did the same journey on two consecutive days one might easily get this position, that on the first day, if the container was lowered on to the lorry already loaded, the tax liability of the lorry would not exceed £70. The next day, doing precisely the same journey, if an empty container was lowered on to the lorry and then loaded, the tax liability would be £110 What is going to be the position of a haulier who never uses a container himself but hires his vehicle out to someone who owns his own container?
As this Clause stands, it is going to make an enormous difference to the hauliers in ports, particularly on Merseyside. The use of these containers has grown and has facilitated the movement of various commodities in Liverpool in the last few years. Very often a container is put on to cart meat or fruit from a ship to stores or shops or to a railhead, or from the railhead to stores or shops. Another type that is used with the same lorry is a tank type of container to carry oils or other liquids. It is only occasionally used, possibly once a month, sometimes less frequently than that. I can give particulars of the work of one lorry in the Liverpool district, owned by a haulier who worked during the fortnight from 18th May to 1st June—six days without a container with loads of rice, cotton, soap and barrels of oil, fours days with a container with loads of meat, one day partly with a container with a load of meat and partly without a container with a load of cotton, and on two days the lorry was not in use at all.
I should like to ask what would be the position of the Traffic Commissioners with regard to the registered unladen weight. It is surely going to make a considerable


difference if the weight for taxation purposes is one and for the Traffic Commissioners another. I hope my hon. Friend will be able to accept the Amendment but, if he cannot, will he receive a deputation of those who really know the difficulties of this business and learn something about it before Report? If he does not like the wording of the Amendment, there are others on the Paper. I am very accommodating. If he will give me the jam I will not quarrel about the pot, or shall I say the container? But I trust he will be able to give some assurance to this very valuable trade.

9.23 p.m.

Mr. White: This Clause is arousing very considerable apprehension in the minds of users of vehicles of this kind, and it is clear that many administrative difficulties, which on the face of it appear to be almost insoluble, will be raised. I understand from reading the Clause that containers, such as bakers' trays and things of that kind, will not be included in its operation, but for the life of me I cannot see why, if it includes some other type of container, every other form of article used for the transport of goods should not be included. I have received a number of communications on the point. If my hon. Friend cannot accept the Amendment in this form, I hope he will do something to remove the anxiety in the minds of many people who have to deal with this difficulty every day of their lives.

9.24 p.m.

Sir J. Lamb: My hon. and gallant Friend dealt very largely with the question as it affects port and dock traffic, but it is not confined to that by any means. It affects a very large amount of traffic in other directions, particularly rural traffic. On market days these lorries are used for the purpose of carrying stock for farmers. I have particulars of a case of a 2½ ton lorry. The present tax is £30 and a speed of 30 miles an hour is permitted. But if this lorry is fitted with a rack for loading it may bring it up to about 3¼ tons and then the tax would be £60 a year and the speed would be reduced to 20 miles an hour. These are considerations which would mean that a man who has previously been carrying stock one day or two days in a fortnight would say, "It does not pay me to cater for that class of traffic now." Agriculturists will be deprived of the service of these lorries,

because many agriculturists are not in a position to pay for a lorry of their own and have to hire one. The Minister, as a motorist, will have on the roads livestock, which all of us say must be removed from the roads because it is a danger to the motorist. But if the agriculturist cannot obtain the service of the lorries he will be forced to put his stock on the roads again. That is a point which the Minister should take into consideration.
But in addition to agricultural traffic there is a large inland industrial traffic which will be affected very much. I have particulars of another man in my neighbourhood who has six vehicles, all of which are under 2½ tons in weight, and there is one particular engineering firm for whose traffic this man caters. A portion of that hire work is for material which is put into a container, and for 300 miles, the average journey, the goods are carried in a container, which is filled at the works and loaded on the lorry at the works. You may say that under this he will not be liable because it is a container which is loaded at the works, but if he calls on his way and distributes part of the load from the container or if he gets to the other end and unloads the container without taking it off the lorry, he will be liable. The Bill says:
If any goods or burdens are loaded into, carried in and unloaded from the receptacle without the receptacle being removed from the vehicle,
then he becomes liable. Here again is the case of a man who is doing for this firm a large amount of haulage. He does altogether an average of 12,000 miles a fortnight. Three hundred miles is done in the container. Is he to say that he must not continue to take this container traffic, because of the increased expenditure it will place on him? This work is done for the same firm and he will probably say, "I must not refuse to carry this particular class of goods, because if I do, I shall probably lose all the other traffic also." There are implications which will be very hard on many of the hauliers, both in rural areas and in industrial districts, and I hope that my hon. Friend will see that this matter is so important that he will give us this Amendment.

9.30 p.m.

Sir Murdoch Macdonald: May I also ask the Chancellor to consider the terms of the Amendment. I do so to reinforce


the arguments which have already been put before him. I do so more particularly on account of the sheep stock owners in Scotland. The small owners of these lorries who convert them to carry sheep stock are made liable to a very considerable extra tax. It so happens that sheep stock has been going through very difficult times, and one of the reasons was the difficulty of transport from the hill regions to the lowland farms in the autumn and winter seasons and back again in the spring. Railway transport particularly in Scotland, became very heavy owing to increased rates, and sheep were very unremunerative. The advent of the motor-car and these floats and containers made it possible to transport sheep in reasonable condition without making them travel over vast lengths of roads, where, indeed, they are a nuisance to everybody concerned. It is a great difficulty in motoring along the public roads when one meets livestock, and particularly sheep. By this Clause as it is at present the Minister will be doing an injustice to a trade which requires all the help which it can possibly get at the present moment, and I hope that he will favourably consider what has been suggested.

9. 33 P.m.

The Parliamentary Secretary to the Ministry of Transport (Captain Austin Hudson): The taxation of motor vehicles is always a difficult matter and also somewhat complicated I think that there is scarcely ever a Finance Bill before this House in which at least one of the Clauses does not deal with this subject. I can say that we certainly do not wish to be in any way unfair to anybody, but I want to explain to the Committee what is the object of this Clause. It is to clear up a very ambiguous position. The position at present is that these vehicles with removable bodies are taxed in some parts of the country in one way and in other parts in another way. My hon. Friend who moved the Amendment mentioned a case in Scotland, but there have been other cases in England in which a completely different decision has been given. It must be obvious to the Committee that we must endeavour to clear up a position of that kind. If you have a position like that you may have an unfair position in which you-get someone running a vehicle with: a removable body and being taxed

at a low rate, never removing that body, and you get somebody in competition with him with a fixed body, doing exactly the same work and taxed on a different and a higher scale. The whole Committee will agree with me that you must endeavour to get a proper, fair and uniform scale.
The trouble about this Amendment is that it leaves the position just as doubtful as it is now. For instance, who is to decide whether goods are ordinarily carried with the container or not? The Clause says that if the removable body is always removed, the Clause does not apply and the weight of the vehicle for taxation purposes is calculated under the Road Traffic Act, 1930, Section 26, on the lower rate. If the removable body is never removed, the Clause applies and the unladen weight includes the container. If it is sometimes removed and sometimes not removed, the Clause also applies, and I think that that is the case with which most of the hon. Members who have spoken have dealt. That container is included in the unladen weight of the vehicle. The intentions of Parliament in this matter are, I think, comparatively clear. If we look at the Road Traffic Act, 1930, Section 26, which is the relevant Section dealing with this matter of unladen weight, we find these words:
… the weight unladen of any vehicle shall be taken to be the weight of the vehicle inclusive of the body and all parts (the heavier being taken where alternative bodies or parts are used) which are necessary to or ordinarily used with the vehicle when working on a road.
Again, if we turn to Section 14 of the Finance Act, 1922, which is applicable to it, we find in Sub-section (1)—this is a little longer than the last quotation but it is important as showing what Parliament intended in this matter:
Where a licence has been taken out for a mechanically-propelled vehicle at any rate under the Second Schedule to the Finance Act, 1920, and the vehicle is at any time, while such licence is in force, used in an altered condition or in a manner or for a purpose which brings it within, or which if it was used solely in that condition or in that manner or for that purpose would bring it within, a class or description of vehicle to which a higher rate of duty is applicable under the said schedule, duty at such higher rate shall become chargeable in respect of the licence for the vehicle.
Therefore, it must be apparent to the Committee that it was the intention Of.the


Parliament that, where alternative bodies are concerned, the heavier body shall be the one under which the vehicle itself shall be charged. My hon. and gallant Friend who moved the Amendment, and I think my hon. Friend the Member for Stone (Sir J. Lamb), dealt with the question of the speed limit. They seemed to think that because of this Clause there should be an alteration as regards the speed limit at which the vehicle should go. I can reassure them on that point. This Clause has been specially worded so that it applies only for the purposes of taxation, and the passage of the Clause will have no effect whatsoever on the question of what speed limit provision the vehicle comes under. Another hon. Member raised the question as to whether it would be necessary to make application to the Traffic Commissioners for extra tonnage and I think that I can allay his apprehension on that matter. There is no obligation on any licensee either to apply for increased tonnage or even to notify the licensing authority if the unladen weight of the authorised vehicle is increased during the currency of the licence.
For these reasons the Amendment would defeat the whole object of the Clause, and therefore I am afraid that I could not accept it to-night. On the other hand the hon. and gallant Member who moved the Amendment has asked me to look further into this matter and also to receive a deputation to see whether the points that hon. Members have raised can be met. I am perfectly prepared to meet a deputation and consider what has been said. I think that the Committee will see that we are endeavouring to clear up an unsatisfactory state of affairs, to carry out what has clearly in the past been what Parliament has laid down. For these reasons, while I cannot accept the Amendment I am prepared to look further into the matter and to talk with my hon. Friends on this matter, in an effort to make it perfectly certain that there is no unfairness to any particular class of vehicle or owner.

9.41 p.m.

Captain Strickland: I am sure that the goods hauliers of the country will hear with great satisfaction that the Ministry of Transport are prepared to receive a deputation on this very important point. I could not help but think, when the

Parliamentary Secretary was speaking just now and making out his case, how very like the whole history of transport the decision of the Government is on this particular point. They want to clear up an ambiguous position. The only way to clear up the ambiguous position is by putting a further weight on to road transport. It never seems to strike them that the great help that they can give in clearing up these ambiguous points might sometimes be settled on the side of road transport itself. Let us see what this ambiguous point actually is. All Members of the Committee know exactly what a container is. A container is no necessary part of a haulage vehicle. It is the container or package which' holds the contents for a journey. These contents may be in loose form, in cases, or packages or they may be inside a container. They may take the form of a certain number of sheep or cattle driven in between wooden slats fixed on the side of a wagon, or it may be a complete float put on top of the haulier's wagon.
The point we emphasise, and the one which my hon. and gallant Friend has emphasised so well, is the position of the small haulier who does not ordinarily use a cover for the goods that he carries. His is the ordinary light 2½-ton platform lorry, and very often when he has to carry a container, the container does not belong to him at all. He goes for a load to some merchant who packs his goods inside his own container. The container is loaded on to the lorry and the haulier takes the load. When he once takes that load the 2½-ton lorry becomes a heavier vehicle in consequence, and he has to pay the higher tax although he may never again use the lorry for taking a container. He may lose the particular job. But as far as the currency of the period of the licence is concerned, the small haulier has to pay for the full licence as though he had the heavier vehicle with the container.
Let me take the case in point of the haulier who has containers for the specialised jobs for which they are necessary. He has to have four or five lorries, perhaps more. Any one of these lorries may be used to take the container at any time. He may only use one, but in order to be covered, should the one that was licensed be away from the depot at the time, he has to pay the additional tax on the whole of his fleet because any one.


of the vehicles might be called upon to take the container. The Clause says that provided the container is lifted from the vehicle during the course of the journey —I want the Committee to note this carefully—he need not pay the tax. That is a most extraordinary point of view. It means that if the haulier wants to evade the tax he can run his lorry into his yard, get the crane going, lift off the container, go on his journey and he would not have to pay the extra licence for his vehicle in use. The road haulier does not want that sort of thing. He wants to know the job that is ahead of him, what his liabilities are, and does not want to have to go in for tax evasion or anything of that sort.
The point that arises is this, that if a job of furniture removing has to be done and it is a small man's job, the removal of a workman's furniture which does not require a big furniture van, the haulier is called in, he fixes his container on to his lorry, loads the furniture, takes it to the new home, and unloads it. Then he has to pay the additional tax for the job, which may have entailed a journey of one or two miles. What happens in the case of a railway? Suppose it is a railway company that does the job. In that case the railway company has not to pay the additional tax. It is only the road haulier who has to pay the tax. The railway company can send their container wagon on exactly the same conditions to the same job. They can send the wagon with its container five miles out into the country, load up the furniture, take it to the station, crane the container off the wagon on to a railway truck, and complete the journey by rail. At the other end they can load it on to another lorry and take it 20 or 30 miles, and they have not to pay anything extra in the way of tax for the job, because they have taken the container off the lorry. I submit that such a thing is going beyond the endurance of a decent man engaged in earning a decent living, and the time has come when we must ask the Government to take more vigorous steps to recognise this great and growing industry of road haulage, and the injustices under which it has to work.
I said that when the Parliamentary Secretary was making out his case he was anxious that we should get rid of

ambiguity. May I remind the Committee of what the late Minister of Transport said when this very subject of containers was being discussed before Standing Committee C? On more than one occasion I have called attention to the definite promises which have been made in the past to this industry—promises which have been broken time after time. An Amendment was moved by my hon. Frien dthe Member for Lewisham, West (Sir P. Dawson), so that the weight of the container should not be included in the unladen weight of the vehicle. The then Minister of Transport used these words:
I can assure hon. Members who believe, and rightly believe, in the increased use of containers in the future, instead of a large number of separate packing cases, that that type of case is met by the wording of the 1930 Act, and that that type of container would not be counted in the unladen weight of the vehicle."—[OFFICIAL REPORT (Standing Committee C), l1th July, 1933; col. 674.]
If we want to get rid of ambiguity, surely here is an opportunity to revert to what was in the Minister's mind, namely, that the container was not an essential part. My hon. and gallant Friend the Member for Birkenhead, West (Colonel Sandeman Allen) mentioned a case in Scotland, which is known as the test case, in which seven judges, including the Lord President, came to the conclusion and laid it down definitely that you could not regard a container as an alternative body because you could not use the container without a lorry platform. They held that it was an adjunct of the lorry, that it was not an alternative body and could not be regarded as such. Therefore, the case went against the taxing authority. That case was followed up by a similar test case in Scotland, and there again the decision went against those who would tax the container.
To-night we ask why the road haulier should have to pay this extra tax. The Minister ought to go very carefully into these things and their bearing on the industry and be particularly careful that he is not led up the garden path in order to impose another burden on the road industry, and thereby benefit its rivals the railways, who will in no case be called upon to pay the tax which the road industry is called upon to pay. I thank the Minister on behalf of the road Industry for his offer to meet a deputation, and I hope that it is not just a nice little


pat on the back with a kind word: "Come and see me and tell me all about it," and then on the Report stage no advance will be made. The time is rapidly approaching when the road industry will not be able to stand much more the treatment that they have had to bear, and when there must be some very plain speaking in order to let the Government know that unless they are extraordinarily careful they will find the whole motoring community, the private owner, the passenger car owner, and the road haulier up against them on the ground that they never seem to have the slightest sympathy with this industry.

Colonel Sandeman Allen: In view of the Minister's undertaking to consider the matter, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

CLAUSE 8.—(Income Tax for 1937–38.)

Motion made and Question proposed, "That the Clause stand part of the Bill."

9.52 P.m.

Mr. Boothby: This Clause is what one might call the meat of the whole Finance Bill. It is upon this Clause that the supply of the community as a whole depends. We are raising Income Tax by 3d. to 5s. in the £ and it is the question whether the Chancellor of the Exchequer will realise his estimate on this Income Tax or not which will really decide whether or not the Budget is a success. Income Tax is much the most important tax, and because of that reason I should like to raise one or two questions with my right hon. Friend. The Prime Minister, in introducing the Budget, based his estimate on the yield from this tax on a continuance of trade recovery in this country. Five shillings is an unprecedented sum outside war or immediate post-war years. I do not think that anyone in any quarter of the Committee is disposed to dispute, and still less to vote against, that figure, but no one can say that one-fourth or 25 per cent. is a small amount of direct taxation to take.
Both from the point of view of the community and from the point of view of the Treasury it is essential that every step should be taken, while we have to maintain this very serious and heavy

burden, to secure that the trade revival and prosperity should continue. The success of this tax depends fundamentally upon confidence. If confidence is shaken we shall not get from this 5s. Income Tax the revenue which the Prime Minister estimated when he introduced the Budget, and it is on that point that I want to put a few questions to my right hon. Friend the Chancellor of the Exchequer, because in the course of the last four or five weeks certain events have gone some way, I will not say to destroy, but to shake the confidence of the business community of this country. If that confidence is not restored, then I say with due respect to my right hon. Friend that he cannot hope to obtain the revenue which the Prime Minister estimated that he would get from this 5s. tax.
This is not the time to go into details of the reasons why confidence was shaken, the National Defence Contribution proposals and the so-called gold scare which followed, but I would like to point out to the Chancellor of the Exchequer that for the last five or six weeks all markets—I do not mean merely the Stock Exchange markets, but markets of every kind—have been in a condition which can only be described as stagnation. If that continues there is no doubt the Government are going to lose a considerable amount in revenue from Income Tax. In fact, it is indisputable that already a certain amount of revenue has been lost.

Mr. Mabane: Is it not a fact that Income Tax is giving a better return than last year?

Mr. Boothby: We cannot take a monthly or a weekly view; we have to take a fairly long view of the prospects of direct taxation, and I only say that it is absolutely essential, if we are to maintain successfully as high a rate of Income Tax as 5s. in the £, that the Government must take every possible step, not only to maintain but, I am afraid it must be said, to restore confidence to the business community of the country. It comes back to the same old question to which hon. Members have referred during the recent months, that there is nothing that kills business under a capitalist system like uncertainty. I have always maintained that if the party opposite ever get into office—I hope it will be a long time before they do—they will get away


with quite a lot if they will make it perfectly plain what they mean, and stick to it. What no business community can stand is uncertainty, not knowing what is going to happen next. One of the things which has caused us anxiety in connection with this Income Tax of 5s. in the £ —a serious burden to impose—is the uncertainty which has arisen during recent months. There is a real danger that if the stagnation which grips markets at the present time is allowed to continue for an indefinite period it may overflow, and may well affect the activity of the business community. There is no doubt a real danger of that, and it is important that the Chancellor of the Exchequer should say something not necessarily optimistic, not unjustifiably optimistic, but something which will restore the confidence of the business community in the future of trade.
Doubts and anxieties have already been expressed during the Debate about the policy of His Majesty's Government with regard to international trade and the extension of trade agreements. The Committee would gladly receive some assurance that it is the policy of His Majesty's Government to do everything in their power to extend and revive international trade, without which industry cannot hope to sustain an Income Tax of 5s. in the £. No doubt the Chancellor of the Exchequer and members of the Government have been a little uneasy about the danger of a too rapid rise in prices in markets generally. I would say that you cannot impose an Income Tax of 5s. in the £ and then on the top of that deliberately take steps to damp down business activity. There are many ad hoc methods of dealing with abuses which may arise out of rising prices, and a general recovery, but industry cannot sustain a 5s. Income Tax if deliberate attempts are made to check the recovery and revival of trade by any government. Where psychological causes are so important, as they are in this case, it is much easier to check recovery than to start it. We have started recovery; it was getting under way very well until a short time ago, and I beg the Chancellor of the Exchequer to beware lest that recovery is checked, and instead of a continuing upward movement we get into what the economists call a deflationary slide, which, if it were to come about, would make a complete

wreck of the Budget and of every hope of realising the estimate which the Prime Minister gave.
Therefore, in asking the Committee to sanction this large impost on industry, I hope the Chancellor of the Exchequer will reassure the Committee and the country, at any rate of his own faith in the present situation. The right hon. Gentleman has sources of information which are not open to us. We do not know the exact conditions of industry. We do not know whether the Chancellor of the Exchequer believes that industry is still in a condition of steadily reviving prosperity. If he does—and I think there are good grounds for supposing that to be the case—I say that he would do good service to the country and to himself if he would say that he believes that British industry is still on the upgrade.

Miss Wilkinson: Does not the hon. Member read the posters of his own party which will give him all this information?

The Chairman: I have been trying to interrupt the hon. Member because a good deal of what he is saying seems to me rather remote from the question. It is perfectly true that a tax makes many people ill, but if you were to discuss the remedies for the illnesses they thus get, I think it would be going far beyond the question.

Mr. Boothby: I am, in fact, a little surprised, Sir Dennis, that you did not interrupt me before. When I thought that you were about to do so I brought in the words "Income Tax," which temporarily saved the situation. I think the Committee as a whole is anxious that the right hon. Gentleman should secure the revenue which is estimated from this heavy tax, but I am sure he cannot do so without the background of confidence. In regard to what the hon. Member has said, I never believe any election poster, and I never issue one myself.

10 4 p.m.

Mr. MacLaren: It is interesting to note that no Amendment to this Clause has appeared on the Order Paper, but I think it is high time someone called a halt to this acquiescence in this Income Tax process. I am not one of those who think we are in a glorious state of society when I contrast some people with no income at all and others with more than they know what to do with. I suggest


that if any man thinks he is going to remedy these economic contrasts in society by a process of Income Tax he is making the greatest blunder of his life. It seems to me that every Government, whatever its complexion, believes that the imposition of an Income Tax upon the people brings about some equalisation in the distribution of income, but it has been truly said that if by a process of Income Tax the State has taken all that Rockefeller ever possessed, it would by that process not have removed the causes of one man dying a pauper and Rockefeller dying a millionaire. There is a blatant fallacy in the mind of almost every citizen in the State that if one goes on with this predatory system of finding out what a man's income is, of hiring officials to find out what he does with every penny of it and then levying a tax upon it, the State is doing something to equalise incomes.
The result of people believing that is that when one looks at the Order Paper, there is any amount of Amendments to other Clauses, but not a single Amendment to the Clause dealing with Income Tax. It seems to be assented to by all hon. Members as something that cannot be challenged. It is high time that some voice was raised for economic sanity and for analysing the whole question of Income Tax. I know it would be out of order if I started to give the House a wearisome time by giving a lecture on the origins of this tax, but there can be no deluding oneself of the fact that the only person who will pay any Income Tax is the person who has a fixed income, and that the large proportion of Income Tax payers with £2,000 or £3,000 a year will pass the Income Tax on to some-body else.

Mr. Boothby: Will the hon. Member explain how?

The Chairman: The Debate is getting rather remote from the question, which is the amount of Income Tax, and not its nature.

Mr. MacLaren: I would like to know on what opportunity it is possible for an hon. Member to protest against the passive acceptance of this fallacious process of Income Tax. Many people in this country, and the majority of hon. Members, think that there is something in the' Income Tax which brings about an equalisation in the distribution of-incomes.

Is there any other opportunity I can take of raising the matter?

The Chairman: I am sure I could not venture to rival the hon. Member's capacity for finding opportunities for doing it.

Mr. MacLaren: May I have your guidance here?

The Chairman: It is not my business on this occasion to give the hon. Member that particular guidance. All the guidance I can give him now on the subject is that the present occasion is not the right one.

Mr. MacLaren: Is it to be said that there shall be no opportunity given to hon. Members to criticise the Income Tax?

The Chairman: I do not think so.

10.10 p.m.

Sir J. Simon: I do not wish to say anything which will extend this Debate, which is necessarily of a very general kind, but I think it is only right and courteous that I should say a word or two in reply to the two hon. Members who have spoken. It is indeed a very significant fact that Income Tax at the standard rate of 5s. in the £ should be, as it is, accepted by practically the whole Committee and received by the country without demur. That is undoubtedly a very striking fact. It is not, I think, quite accurate to say that this rate is the highest reached in time of peace. Conditions for a year or two after the War were very abnormal and in 1920 and 1921 the standard rate was 6s.; in 1922 it had been brought down to 5s.; and I think there has been at least one occasion since then when the standard rate has been 5s. As I ventured to observe in the first speech which I made as Chancellor of the Exchequer, at a time when attention was perhaps particularly concentrated on a particular matter so that observations on other subjects hardly received more than passing notice, Income Tax before the Great War was 1s. 2d. in the £.
The hon. Member for East Aberdeen (Mr. Boothby) asked me whether I would say one or two words about general confidence, and I need not say that I should be glad to contribute anything if I thought it would be helpful, but I am not sure that words about general


confidence from a new Chancellor of the Exchequer would necessarily greatly advance matters. However, I will say that I entirely agree with the hon. Member that if the country is to bear these tremendous burdens and if we are to raise these enormous sums from trade and commerce, it undoubtedly requires that the condition of affairs should be certain. The hon. Gentleman knows that uncertainty is the enemy of confidence, and I would venture to add to that platitude an observation which is perhaps not always equally borne in mind by everybody. One of the best ways of producing uncertainty is consciously or unconsciously to promote scares. The Chancellor of the Exchequer has to weigh every single word which he utters, even in answer to a supplementary question, and I think the hon. Member will agree with me that it is the duty of every man in any public position, while speaking frankly about the position as he sees it, to remember that possibly some element of uncertainty may actually be created by a demonstration of anxiety or excitement which we must all help to control.
As for the question as to whether there is good ground for believing that recovery will go on, I think there is every ground for believing it. There is no solid reason for supposing that the movement towards recovery has reached its peak. Nothing of the kind. While it is obviously true, as I said in the Second Reading Debate, that world depression has had disastrous effects, especially on international trade, and while there is still a great deal to seek in the recovery of international trade, let us not forget that unquestionably international trade has passed the worst point and is showing fairly rapid recovery. Let me add, for my part, that I would attach the greatest importance to international co-operation both in the monetary and the economic fields and any influence which I had, would certainly be used to promote that view. There shall be no effort lacking on my part, so far as I am able to contribute to promoting that end, in the responsibilities in which I now find myself.
I do not think it is the general wish of the Committee, who have other most complicated Clauses to deal with, that we should spend too long on these general matters, but it is right that in passing a

Clause which, as my hon. Friend said, is the very meat of the Bill, the thing that produces the money, we should not do so without something being said on these aspects of the question. It is satisfactory to me, and I think to most Members of the Committee, that there should be such a general willingness to face this very high figure of charge. From nothing may we take more confidence than from this fact that in the Income Tax, we have a system of taxation which has been worked out, with abatements at one end and the Surtax at the other end, by every party in turn in an effort at least to get a contribution which is fairly adjusted, and thanks to which we have the certain knowledge that the whole country is prepared to face the charge and pay what is necessary.

CLAUSE 9.—(Higher rates of Income Tax for 1936–37.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

10.17 p.m.

Mr. Tinker: This Clause deals with a class of persons to whom the hon. Member for East Aberdeen (Mr. Boothby) referred, namely, those who are in receipt of incomes above £2,000 a year. That these people are doing fairly well at the present time is shown by the fact that the Chancellor of the Exchequer expects to receive more in Surtax this year than he did before. Last year he got £53,500,000 from this source, but this time he is budgeting for £58,000,000, which seems to show that the number of people in this class is on the increase. I wish to suggest that here is a fine place in which to get more revenue. I suggest that the House of Commons has not, up to now, paid sufficient attention to the suggestion that the limit of £2,000 should be brought to a lower figure. I think it could easily be done and a greater amount of revenue derived from these higher incomes without any real hardship to anybody.
I have always held that there is no need for excessive fortunes remaining in the hands of the idle. In fact it would be an advantage to these people to take some of their wealth from them and utilise it in other directions. We argue a lot about 5s. in the £ Income Tax, but


we ought to pay more regard to these higher incomes and take more from them than we are doing. If we did so we should only be fulfilling our duty to the people of the country. Up to the present this matter has passed without much comment, but when one realises the extremes in this country, the poverty which exists on the one hand and the great wealth on the other, I think it is time that something was done to deal with the situation. The hon. Member for East Aberdeen expressed some forebodings as to what might happen in regard to Income Tax, but I have heard that cry so often that I am growing tired of it. We had here one right hon. Gentleman who has now gone to another place and he was never tired of pointing out that if you taxed the rich you would drive them to other countries and they would take all their money with them. But they have not gone yet, because they know that this is the best place in the world for the rich man and they will not go, whatever you do.
I say that the time has come when this House will have to arrest the wealth going into so few hands, as it is doing, and leaving so many poor people. I understand that something like 100,000 people pay Surtax, and I want to know how many people there are with incomes between £1,500 and £2,000 a year. I have been trying to find out for myself, and some figures that I have been able to find back to 1932–33 seem to give the number as about 800,000. I think the Committee ought to know these things, because the time must come when taxation will have to be put on a steeper grade than it is at present at the higher levels. I have no intention of voting against the Clause, because if I did, it would mean that the rich men would get off for the time being, but if to-night I had any power to make the Surtax applicable to incomes of £1,500 and upwards, I should certainly do it, in the belief that I was serving the best interests of the country. I hope the Financial Secretary or the Chancellor of the Exchequer will give us some indication of the number of Surtax payers and, if he can, of the number that there would be if the limit was brought down from £2,000 to £1,500.

Major Dower: The hon. Member suggests that these people are idle and do

not work, but, of course, that is absolutely nonsense.

Mr. Tinker: I did not say that. I said that it would be to their advantage if they had less of this wealth, and if what they had was distributed more evenly throughout the country. I did not use the word "idle" in regard to them, though it might have been in my mind.

10.23 p.m.

Mr. Petherick: I am afraid I cannot agree with the hon. Member for Leigh (Mr. Tinker), who wishes to lower the Surtax limit. I wish, however, to deal with another point altogether. I think it would be really ungracious—in fact, almost churlish—to allow this Clause to pass and go upon the Statute Book without at least one voice being raised to congratulate all those responsible for its production on the naive and charming Clause which they have put before us. The Treasury officials, the Parliamentary draftsmen, and indeed, the printers, all deserve, I think, a meed of thanks, and I would even go so far as to congratulate my right hon. Friend the Chancellor of the Exchequer on the very choice and rare heirloom which, in common with other heirlooms, he has inherited. I do not wish to ask the Committee's leave to read the Clause, but if they will look at the Clause, they can hardly fail to be impressed by it. When first I read it over I thought it meant absolutely nothing at all, perhaps in my darkness and ignorance, but when I had read it over several times, I began to have some dim understanding and appreciation of its real and true merits. I believe that this is an attempt by the Parliamentary draftsmen to bring our Parliamentary language quite up to date. There are those who cannot fully appreciate Surrealist literature. It is an acquired taste, rather like modern art, music, and painting, but when I had read the Clause several times over I at last began to understand—at least, I thought I did—what it meant.
There are some Philistines who might claim that a simpler form of words should be used. For instance, the Clause might read something like this: "Surtax for 1936–37 will be the same as for 1935–36," or some other sordid and jejune form of words which would not, I am afraid, commend itself to the draftsman. The framers of the Clause in their wisdom and taste for literature have produced this noble


example, such a perfect example of the art, that it would be sacrilegious to criticise it, but I will venture to make only one remark on it. At the end of the fifth line, I think the interest and excitement of the reader begins to flag. He has been worked up to this great pitch, almost fever pitch, of interest, and then the narrative begins to fall away. He gets left with a sense of emptiness, of anticlimax, almost of frustration. May I suggest to the Chancellor of the Exchequer that he considers this matter again with the possibility of repeating once or twice the fourth and fifth lines of the Clause? I hope that no one will misunderstand my motive in bringing this to the notice of the Committee. The Clause is a great monument of English prose which deserves to be imperishably enshrined in the treasury of our English literature, or, perhaps I should say, in the English literature of the Treasury.

10.27 p.m.

Lieut.-Colonel Colville: My hon. Friend is wrong in supposing that this Clause means nothing at all. To the man with an income of over £2,000 it will mean that he will pay more than last year, and I hope that he did not lose interest before he read the whole of the Clause. The wording of the Clause is not new this year. It is in the same form as on previous occasions. It prescribes the rates for Surtax purposes for 1936–37, and those rates are rates exceeding the standard rates which are chargeable in respect of the excess of the total income of anyone who has an income of over £2,000. I hope that my hon. Friend feels that I have added to the literary value of the Clause. The rates for Surtax purposes for 1935–36 were rates exceeding the 1935–36 standard rate, which was 4s. 6d. in the £. The rates now proposed for 1936–37 are rates exceeding by the same amount the 1936–37 standard rate, which was 4s. 9d. Whereas the rates last year ran up to a maximum of 12s. 9d. in the £, the rates now proposed run up to a maximum of 13s. on the higher incomes.
The hon. Member for Leigh (Mr. Tinker) expressed the view that if the Surtax payers were increased in number there would be an increasing revenue without doing harm to the population in general. I would remind the hon. Mem-

ber that Surtax payers have had no relief from the additional 10 per cent. put on in 1931. He asked me the number of Surtax payers. They are approximately 90,000. As I have indicated, the rates run up to, in the highest case, 13s. in the £. The hon. Member is wrong in supposing that Surtax payers are all idle persons; a great many have earned incomes. I hope that with these words the Committee will pass the Clause. There is no change in the amount of the Surtax, but it comes on the top of a higher standard rate of Income Tax.

10.31 p.m.

Mr. Emmott: Are the Committee to understand from the figure which the right hon. and gallant Gentleman has just given that in recent years there has been a considerable diminution in the number of Surtax payers? He gave the number of persons assessed to this tax as 90,000. In the latest year for which statistics are given in the Blue Book, the year 1929–30, the figure given is 109,749. There is a very considerable difference between that figure and the figure given to the Committee, and it might be of interest if the right hon. and gallant Gentleman could say whether, in fact, there has been a decline.

Lieut.-Colonel Colville: I have here a more recent publication than the one which the hon. Member has consulted. In 1930 the number of Surtax payers was 104,000; in 1931, 93,000; 1932, 86,000; 1933, 83,000; 1934, 85,000; arid the estimate I am giving, to the nearest available date, is approximately 90,000.

10.32 p.m.

Mr. Ellis Smith: Those figures are very illuminating, and support the stand taken by the hon. Member for Leigh (Mr. Tinker) about this Clause. The whole question of the distribution of wealth in this country arises on this Clause and I wish to make a few observations about those 90,000 people who are receiving at least £40 a week each.

The Chairman: The hon. Member has given me an intimation that he intends to go a good deal beyond what are the limits of debate on this Clause.

Mr. Smith: The Clause deals with the tax, and in line 8 there is a reference to individuals with an income of more than £2,000 a year.

The Chairman: Yes, but the sole question involved is the rate at which this tax shall be charged for a particular year.

Mr. Smith: I think the question arises whether we are in favour of the figure remaining at £2,000, and we here wish to suggest that it is altogether too high, and that the tax should be payable on incomes of considerably less than that. We are strengthened in that conviction by the enormous increase which is taking place in the cost of living. We feel there will have to be increased expenditure on the social services during the next 12 months to meet the case of old people who are having to manage on pensions of l0s. a week, of the unemployed who are receiving 15s. a week, and those who have to depend on the Unemployment Assistance Board. This level of £2,000 will have to be drastically reduced in order that the wealth of the country can be more fairly distributed. I hope the Chancellor of the Exchequer will give serious consideration to the need for indicating very definitely to those people who are well fixed in life that not only will they have to pay their share towards maintaining the defences of this country, but that if what is happening brings about an increase in the cost of living they may be called upon for a further contribution when he introduces his Budget next year. I want to indicate the tendency with regard to indirect and direct taxation, which is that the people dealt with in this Clause are being relieved of their share of taxation. Many of them are removing to the Channel Islands in order to avoid their responsibility. In our view, the time has arrived when the House of Commons should deal with this question. We are not prepared to allow this to go by without issuing a warning that we think the time has come when the charge for social services should be increased in order that the people who receive pensions or unemployment assistance may have their allowances increased accordingly.

CLAUSE 10.—(Prevention of avoidance of tax by certain transactions in securities.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

10.37 p.m.

Sir J. Simon: I think the Committee will expect to have a short explanation of this rather complicated Clause. This is the Clause which was referred to by my predecessor in the Budget speech as the proposals which the Finance Bill would contain to deal with the form of transaction in securities which is frequently known as "bond-washing." If the Committee will be good enough to give me their attention I will state what is involved and will give an illustration which will probably be the simplest way of showing what is wrong and how to stop it.
The principle of Income Tax law is that, for the purposes of Income Tax, the dividend which arises from a security or holding of some kind or other is the income of the person who is the owner of the security at the time when the dividend becomes payable. Consequently, if the owner of a security can arrange that, just before the dividend becomes payable, the ownership of his security passes to somebody else for the time being, in such circumstances as will not attract the tax, and can then secure that the security comes back to him after the date is passed, it follows that the dividend will not belong to him as the owner at the critical moment when the tax has to be paid. Suppose that it is a foreign security and that he passes the security to a foreigner abroad to hold for the time being; the security will not be liable to English Income Tax. If, by a specially arranged transaction, the owner of a security passes the ownership to a place where, for one reason or another, it will not attract tax, and buys it back again by an artificial transaction when the tax moment is passed, that is, of course, an evasion of tax.
The Clause is framed to deal with all kinds of bond-washing, and I think that hon. Members, if they will look at it closely, will feel that it has been very carefully framed. It is a very complicated matter to state, and the Clause, I think, states it as plainly as it can be stated. May I give an illustration? Let us take the case of the owner of a foreign security of the capital value of, say, £100. The moment is approaching when the security is going to pay a dividend—let us say, for convenience, a dividend of £2. If the owner holds on to it, and never lets it go, when he receives that £2 he receives


a sum which will come under Income Tax and will be taxed. Supposing that he does that, with the Income Tax rate at 5s. in the £, there will be mos. to go to the Revenue out of the £2 dividend, and he will be left with £1 l0s.
Suppose, however, that he sells that foreign security cum dividend, before the dividend is paid, to a foreigner, and suppose that he sells it for £101 17s. 6d. Its value is £100; it is going to earn so he sells it for £101 17s. 6d. Suppose that he leaves it in that foreign ownership until after the day has passed when the dividend is paid, and then suppose that he buys it back again, ex dividend, at, let us say, £100. He receives the difference between the two prices, that is to say. £1 17s. 6d. That is not liable to tax, since it would be regarded as a capital gain, as it would in the case of any one of us if we sold and bought a security. In that case the Income Tax of l0s. on the £2 dividend is lost, for the dividend on a foreign security in the hands of a foreigner is not liable to tax; and there is l0s. for somebody, which, we may suppose, is shared as to 7s. 6d. by the original owner and as to 2S. 6d. by the obliging foreign gentleman who has taken so much trouble.

Mr. Bellenģer: Would not this interesting transaction incur Stamp Duty?

Sir J. Simon: It might or might not, but, whether it incurs Stamp Duty or not, these things do occur, and are believed to have occurred recently to a very considerable extent indeed. It is estimated that the annual loss of tax, at the standard rate, from transactions of this sort, may amount to as much as £1,000,000.

Miss Wilkinson: Has any attempt been made to prosecute in such cases?

Sir J. Simon: Speaking off-hand, I should doubt whether it could be shown to be a case for prosecution. I am sure the hon. and learned Member for North Hammersmith (Mr. Pritt) will agree that the real principle is that the Revenue is somewhat in the position of a gamekeeper having to tax a poacher, and, so long as the poacher does not break the law, he cannot, of course, be pursued. It is our business to stop the hole. The Committee will be interested to know that it is not merely the Revenue that would be inclined to stop this practice. The

proposal for dealing with bond-washing has been the subject of discussion for some time past with the financial authorities in the City—the Committee of the Stock Exchange, the banks, and the discount and acceptance houses; and it is due to these authorities to say that, so far from putting the smallest difficulty in our way, it is very largely due to the attention they have called to it that we have been able to work out this matter. The practice is not a very honourable one, and there are plenty of honourable people in the City who would not do it themselves.
I am very glad to think that we have drafted a Clause which has the support of all these financial authorities. They welcome the legislation that is proposed, and I am in duty bound to say here that we are especially indebted to the Stock Exchange Committee, who have examined the Clause from every point of view for the purpose of assisting us, and have given very valuable advice and assistance in its preparation. I cannot, of course, guarantee to the Committee that this is going, in vulgar language, to "do the trick." The ways of ingenuity are very numerous, but this is, as far as I am able to judge, a most valuable Clause, and I think the Committee will be doing good work if they add it to the financial provisions of the country, because it aims at stopping, and it will undoubtedly stop, methods by which this has been attempted, it will secure revenue for the country which we ought to receive, and it will, I trust, finally put an end to artificial methods which, although they may be within the law as it stands, are certainly against the spirit of the law.

10.46 p.m.

Mr. Pethick-Lawrence: Hon. Members associated with me support, as I am sure the bulk, if not the whole of the Committee will support, the provisions set out in this Clause. We arc very glad that the Government are taking a step to stop this form of tax evasion. The Clause is designed to tax those who make definite arrangements in advance. Is the right hon. Gentleman satisfied that that will stop the proceedings; or may not a similar method, of a little less formal character, be substituted for it, and possibly get through the regulations that he proposes? The Clause is not retrospective and it does not commence to operate


until practically the date of the introduction of the Budget. There is, of course, a good deal of ground for saying that people who have been indulging in this have been guilty of deliberate evasion for a long time, and there would be something to be said for making the operation of the Clause retrospective. On the other hand, there are always objections to retrospective legislation, and I can understand the motive which has prompted the right hon. Gentleman or his predecessor to take a different view.
Of course, the £1,000,000 which he described as an estimate of the amount that would be reached by stopping the evasion has not taken account of Surtax, and, as this tax is not to be retrospective, as I see it there will be no advantage in the current financial year to the Surtax, because that dates back to the previous year, to which this provision does not apply, so the advantage to the collection of Surtax will not begin until the next financial year. But, with regard to this retrospective legislation, I should like to ask, if it is found that, in spite of the Bill, the method of evasion is practiced—[An HON. MEMBER: "It will be."] The Clause is fairly tightly drawn and it may be somewhat difficult to evade. I hope that the Chancellor will give us an assurance that if, in spite of these provisions other methods of getting round them are discovered, in some future Finance Bill he will not feel any scruples about making retrospective the further provision which will be necessary, so as to catch people who are attempting to evade the tax. There is one other point which I think he might explain for the benefit of the Committee. He pointed out that there were many forms of bond-washing and he gave us an example of one in particular, the sale of foreign securities and sale to a foreigner. I imagine that a still bigger class of evasion does not concern foreigners. It is worked through financial houses in this country. Perhaps the right hon. Gentleman will give some indication of the kind of way in which, where the whole transaction is domestic, this method of evasion is actually practised. With those brief remarks I have pleasure in supporting the main intention of the Clause.

10.52 p.m.

Mr. Silverman: I think that everybody will congratulate the Treasury on any endeavour which it makes to stop the

multifarious methods of evading just dues practised by loyal citizens of the Empire, but we may be permitted to think that the right hon. Gentleman's estimate that the machinery provided in this Clause is going to stop this particular loophole a little optimistic. He described a transaction or a series of events and invited the Committee to draw the inference that wherever that series of transactions had taken place duty would be attracted. But that is not in the Clause. The Clause requires something far more than the series of transactions which he described. The Clause lays on the Treasury the duty of proving that there was an agreement by which the repurchase takes place. I do not know whether I am being over-subtle or not, but if I am I hope that the Committee will forgive me, because it is over-subtleties which we are trying to defeat, and possibly the only way of defeating the Artful Dodgers is by having an Act which is a little more artful than they are. I see that:
Where the owner of any securities … agrees to sell or transfer those securities, and by the same or any collateral agreement—

(a) agrees to buy back or re-acquire the securities; or
(b) acquires an option, which he subsequently exercises, to buy back or re-acquire the securities;"
then these consequences will follow. But what does the right hon. Gentleman suppose that these gentry are going to do when he has passed this Act? When the time-honoured operation of "bond washing" is proposed in the future does he suppose that the vendor and the purchaser will go into a solicitor's office, draw up a document, stamp it, and sign it, with witnesses, whereby the vendor will agree to buy back, or whereby the purchaser will give the vendor an option to buy back, and then present that document to the Treasury Commissioners so that the purpose will be defeated? Of course they will do no such thing. In future if this series of transactions occurs it will occur without any document and without any evidence. When the Board of Inland Revenue or the Income Tax Commissioners come along and say, "On such and such dates these transactions took place, therefore there must have been an agreement that they should take place, arid the tax is payable," They will be boldly told, "There was no such agreement at all. It


happened that Mr. A. sold to Mr. B., and that on a subsequent date Mr. B. re-sold to Mr. A., but Mr. B. was not under obligation to sell to Mr. A. and Mr. A. had no right under the principal agreement of sale to repurchase his security." It will then fall, as I understand it, to the Treasury to prove that there was some such agreement.
In circumstances of this kind, where you are dealing with people who are up to a great many dodges to avoid payment of their just obligations, if you provide in an Act of Parliament that the Treasury must prove an agreement before the hole is stopped, I say with confidence that in a great many cases the Treasury will find that the onus of proof will be one that it is impossible to discharge. A much sounder way to stop the gap would be to provide, wherever possible, for an agreement saying whether it was with or without an option to re-acquire. In that way, the right hon. Gentleman might have succeeded in stopping it instead of laying upon the Treasury an onus, which, in the majority of cases, the Treasury will be unable to discharge.

10.57 p.m.

Mr. Pritt: I have been worried about a type of transaction which this Clause, admirable as it is, does not touch. I do not know how far the Treasury arc informed about it, or whether they will say that my information is unreliable and that it is not done to any great extent. I understand that there are a certain number of people in the country, large holders, who never draw any dividends at all, but simply sell their stocks and buy other stocks from time to time. They always have enough money on which to live and never pay any tax at all. I wonder whether the time has not come for the right hon. Gentleman's advisers to consider the practicability of giving the Commissioners of Income Tax the right, within certain limits, of saying, "Whereas you do in fact normally hold stocks of a capital value of, say,,£70,000, and whereas your taxable income is a perfectly negligible proportion of the nominal return from that sum, subject to appeal to the Commissioners, we assess you as a person who is to be deemed to have an income of 5 per cent. of £70,000." I doubt whether the evil is large enough to be worth dealing with,

but I think that it is a practical proposition.

11.4 p.m.

Sir J. Simon: Perhaps I may be allowed to say a few words in reply. As regards the point which has just been put by the hon. and learned Gentleman the Member for North Hammersmith (Mr. Pritt), what he has said will be on record. I do not want to deal with it off-hand, as it is rather a different kind of case, and I am not sure what particular considerations apply. The hon. Gentleman below the Gangway will understand me when I say that I am not disposed to speak with quite as much confidence as he displays. I am not prepared to accept dogmatically that the Treasury will not be able to do this or that. I think that the matter may very well work out rather differently. It does not appear to me that, under the Clause, it will be the least obligatory in all cases for the parties to the contract to insist on the original contract being produced.

Mr. Silverman: On the Second Reading I raised this point and asked the Financial Secretary whether for this purpose it would be necessary for an officer of the Treasury to prove that there was an agreement. The Financial Secretary said that it would be necessary.

Sir J. Simon: I think I can give an answer that the hon. Member will think is fair. We must not make the mistake of talking so much about onus in this connection. What really happens is that the contract to sell and the contract to buy back are both expressed in contract notes. The authorities are very much disposed to draw their own conclusion. They draw their conclusion on the material before them, and if they consider that the conclusion is one which shows that the taxpayer is liable to treatment under this Clause, they will assess him. The remedy for the taxpayer if he does not agree with the decision is to go before the Commissioner, and on the material then produced by one side or the other they will have to decide whether the Inland Revenue are right or whether the citizen is right. That is fair. I do not think it is quite a case of saying, "There is the onus of proof on you, and unless you establish it beyond all possible contradiction, your hands are tied and you can do nothing." I do not think we shall find that it will work out in that way.
The right hon. Gentleman who spoke first from the other side truly pointed out that there are many forms of evasion which might be adopted. He gave only one example, which happened to be sale to a foreigner, but there are other forms, highly technical to describe, which could be carried out without sale to a foreigner. There could be sale to a finance house. In essence, they do not differ from the method of selling a security cum-dividend, buying it back ex-dividend and then discovering some way or other by which the dividend does not catch the tax as it ought to do. Sometimes the form of contango contract may be used. We do not intend that this Clause should touch the ordinary contango contract used by the speculator who buys securities.
I hold very firmly to this general proposition, although there may be exceptions, that, generally speaking, if we find that there is a hole in the tax law which is open for people to use, and we have failed to stop the hole, we shall not go back and treat the tax retrospectively. But there is a question which arises in the next Clause. When we come to it, we shall come to a subject in regard to which my predecessor, the Prime Minister, last year issued a warning, in the Finance Bill. He gave notice that if these clever people who were engaged in preparing such schemes of avoidance, which he was then trying to meet, were still adopting artificial arrangements, he would avail himself of the opportunity of making the provision retrospective at the time when he spoke.
That is an exception, and, I think, a legitimate exception. If these artificial transactions are not stopped, if it is discovered that the net is not quite complete, I shall not feel myself bound by the ordinary rule that these provisions must operate as from the time of enactment. I give warning now that we do not intend this particular net to be evaded by some ingenious variation which falls within the principle of the Clause we are now enacting.

11.6 p.m.

Miss Wilkinson: We cannot let this matter go without making our protest. The Chancellor, in the most charming and winning way, has skirted over what is really a scandal. He says that there

has been evasion of Income Tax on these lines to the amount of about £1,000,000 a year. Obviously it is not a matter which has just cropped up; it has been going on for some time, perhaps for some years. That means that it has been known to Chancellors of the Exchequer that a certain amount of tax evasion has been going on.

Sir J. Simon: To the best of my belief that matter was first drawn to the attention of the authorities in a speech by an hon. Member who is a member of the Stock Exchange in the Debates last year. Inquiries were made, and we have lost no time in stopping the gap. I know the hon. Lady well enough to know that she does not wish to do anyone an injustice.

Miss Wilkinson: I do not want to do the Treasury an injustice, but the Treasury employs highly skilful officials. Although this may have been brought to their notice last year the Chancellor of the Exchequer will not say that it only originated last year. It has been going on for some time and the Treasury ought to have found it out. I suggest that if this had happened in my own constituency it would have been found out and dealt with long ago. Here are wealthy people who have been evading Income Tax, and it has not been considered the duty of the Treasury to find it out, and even when it is found out it is to be regarded as something to be dealt with in the coming year. The Chancellor of the Exchequer has admitted that the Treasury have the power to deal with it retrospectively, and therefore I suggest that there is in this matter, in this Clause and in the way in which the Chancellor has dealt with it one law for the rich and one law for the poor.
In my constituency, men have been driven nearly to insanity because of sums of 3s. or 4s. not having been declared to the appropriate authorities, and after a few weeks they have been prosecuted and sentenced. Here are men who have evaded Income Tax to the extent of £1,000,000, and all that the Chancellor says is that in the future he hopes that they will stop doing so, and although he admits that he has power to deal with them retrospectively, he does not propose to do so. There is nothing to be done about it, but before we pass this Clause, I, as representing a constituency which


has been very severely hit and which is under the harrows of the Unemployment Assistance Board Regulations, want to make this protest.

11.11 p.m.

Mr. Garro Jones: While concurring in the remarks made by my hon. Friend the Member for Jarrow (Miss Wilkinson), I think it would be wrong if the Committee did not recognise that the Government of to-day have progressed to a considerable extent beyond past Governments in their attitude towards tax evasion and tax avoidance. I have heard the right hon. Gentleman the Member for Epping (Mr. Churchill), from that Box, conniving in, if not attempting to justify, the action of taxpayers who, as he termed it, sought to avoid rather than to evade. What has been the result? There is on the part of lawyers of the highest skill in the City a belief that they are entirely justified in utilising their great skill in devising methods of avoiding taxation. I venture to lay down the general proposition that there are no specific safeguards which the ingenuity of the Treasury can devise which the ingenuity of City lawyers will not in time be able to evade.
Therefore we find ourselves in a difficulty, and I believe that the way to meet it is to adopt the suggestion made by my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence). The Chancellor of the Exchequer appeared to be a little squeamish about adopting the general principle that there should be retrospective legislation to safeguard the Treasury against evasion, but I fail to see why a principle which is salutary in the case of the evasion of one tax should not be salutary as a general principle in the case of the evasion of all taxes. I would commend to the notice of the Chancellor the experience of the President of the United States of America. They have suffered in that country, I will not say more, because the extent of the evasion in this country is little known, but they have certainly suffered severely from the ingenuity of City lawyers and barristers, or their corresponding ranks in that country. The President of the United States has spoken in terms even more than those which the Chancellor of the Exchequer has used to-night in denouncing these ingenious methods.
I know very well the difficulty of retrospective legislation, but surely it could be riveted to the question of motive. The law is well accustomed to examining into motives. If it could be shown that the motive of any particular transaction was the evasion or avoidance of a tax, that should be sufficient to nullify that transaction and enable the Treasury to recover the money. Therefore, I invite the Chancellor to study what has been said by the President of the United States and to go a step further. Let the Government not merely refrain from smiling upon tax evasion, but frown upon it, and denounce it in no uncertain terms. Then we should have the first line of defence, which would be that reputable and skilful lawyers would not regard it as a justifiable part of their activities to devise these ingenious methods of evading the tax, and we should then be able to pass to the final and, in my view, only effective safeguard of enacting that measures designed solely to evade shall be rendered nugatory in future Finance Bills.

CLAUSE 11.—(Amendments of 12 & 13 Geo. 5. C. 17, S. 21.)

11.15 p.m.

Mr. Annesley Somerville: I beg to move, in page 10, line 4, to leave out "as soon as it became due and payable to," and to insert "twenty-one days after its receipt by."
The object of the Amendment is to prevent the taxpayer from being made liable to pay tax on income which he has not yet received. Under the Clause as it stands income may become due and payable on 31st March, and yet may not be paid until the following May. The courts, I understand, have decided that income is not to be regarded as income until it is actually received, and it seems reasonable and just that under this Clause a man should not be called upon to pay tax on income which he has not yet received. I hope the Amendment will recommend it self to the Chancellor.

11.16 p.m.

Sir J. Simon: I cannot accept the Amendment. I agree that it has a plausible air, as stated, but we must understand that this Clause has been devised—and I am sure my hon. Friend


entirely sympathises with this object—to prevent, not genuine ordinary transactions, but artificial transactions under various forms. The whole purpose, for example, of Sub-section (2, b) of the Clause would be nullified if we were to introduce a limit like 21 days. If the Committee will allow me I will take this opportunity of offering a general explanation of the Clause. Hon. Members know that, generally speaking, Surtax, which used to be called Super-tax, is a tax borne by the individual. It cannot be borne by companies in the ordinary sense, because, of course, you cannot say that a company is rich because it makes a profit of £10,000 a year and another company is richer because it makes a profit of.£20,000 a year if the second company is a very big one and the first company is a very small one. Broadly speaking, we may say that whereas Income Tax is a tax which attaches to both individuals and to companies, Surtax does not attach directly to companies, though in fact it works back and catches the principal shareholders of a company or, it may be, well-paid directors, as individuals. But if you left the law like that, then it would be possible for an individual to get a few people to join with him and to turn himself into a company and by that operation, and nothing more, to escape Surtax.
That, of course, has been realised for many years, and I think as long ago as 1922 provision was made for dealing with an entity which in form was a company—what was called a "one-man company" or one in which control was actually in the hands of a very limited number of persons, so that really it was nothing more than a form in which the individual put himself. Then there were powers in the Inland Revenue, in proper cases, to challenge that company and to say that, even though it did not distribute dividend in ordinary management, it ought to have distributed dividend, and it would be treated as though the income of the company were the income of the members. There are many cases in which the Revenue has had knowledge of the adoption of these ingenious though, I must add, especially after what the hon—lady the Member for Jarrow (Miss Wilkinson) has said, perfectly legitimate but, as a matter of fact, highly artificial methods by which Surtax was in certain cases evaded.
This Clause deals with three artificial arrangements which are sometimes adopted, mainly for the purpose of avoiding the payment of Surtax. The first is an arrangement of shareholding rights which are used to bring a company within the expression "a subsidiary company," an expression which was used, I think, in Section 21 of the Finance Act, 1922, and which for very good reasons was said not to be within the general law at that time. While, of course, genuine subsidiaries of a genuine public company ought to be, and are, protected, the tax-avoider, with his one-man company, can create a second company with a capital of a more or less nominal amount held equally by a number of persons not exceeding five. This second company is given the majority of the shares in the one-man company, and so the latter becomes a subsidiary company. Then, says the ingenious gentleman, you cannot call upon that subsidiary company to explain why it does not distribute its dividends, or whatever it may be, and it is entitled to all the advantages of being a limited company, because it is a subsidiary company and, therefore, not within the law affecting one-man companies. In Subsection (1) of this Clause we are proposing to limit the definition of a subsidiary company so as to exclude any company which has, under any one of the various tests of control, been found to be under the control of not more than five persons none of whom is a one-man company. I do not flatter myself that I have succeeded in making that rather elaborate proposition entirely plain to everybody, but I think I have probably made it plain to those who are familiar with the subject, and anybody who has studied the Clause will see that that is the effect of Sub-section (1).
The second device was quite different. It took advantage of the fact that under the law as it now stands the Special Commissioners of Income Tax—who are the people who would have to call a one-man company to account and, in certain cases, deal with its income as being the income of the person who owned the company—can only take action by reference to the year or other period for which the company has made up its accounts. Apparently a simple way of turning that corner has occurred to some people. They


have a one-man company that does not make up its accounts, and that one-man company may sometimes link itself up with another one-man company, so that you are continually having a succession of one-man companies, none of which makes up its accounts in such a way as to come within the purview of the Special Commissioners. Perhaps we ought to have thought of that before, but we have found out how to stop it now. We propose to stop it by Sub-section (2). The Committee will see that it will not only be impossible for the taxpayer to escape indefinitely, but it will be impossible for him to bring about a time lag in payment. The Sub-section will give the Special Commissioners alternative power to deal with the income of the company by reference to the income of the year of assessment as an alternative to the income of an accounting period.
The third device fastens on this fact, that the Special Commissioners, in apportioning the income of the company for the purpose of charging the Surtax of the people who between them own and control the company, can apportion any income arising before the liquidation of the company only by reference to the rights which the members of the company have in distributions of income. It appears that investment companies which are avoiding tax are being formed with a small capital in which the one man in control holds only a few shares of a special class entitled merely to a small fixed dividend, but at the same time he is entitled on a winding up to the whole of the surplus assets after paying off the small amount of capital. A second class of shares held by several persons, usually persons with a very small income, is entitled to the whole balance of any income distributed after paying the small fixed dividend to the first person I have mentioned, but in winding up is entitled merely to repayment of the amount paid up. In working out that system the tax avoider retains full control over the affairs of the company and keep his hand on them, and he can secure that no distributions of income are actually made to the holders of the second class of shares, although most of the income has to be apportioned to them by the Special Commissioners. Sur-tax only attaches when income is of a certain size and the appor-

tionment to these people involves little or no tax. That is a highly artificial arrangement.
These three matters have been brought to our attention, and, in order to defeat this extraordinarily artificial device, Subsection (3) gives the Special Commissioners, for the first time, power to apportion the income of an investment company by reference to the respective rights of members on winding up as an alternative to their present power of apportioning by reference to their rights to income distributed as dividend.
These are the three extremely artificial methods. They are perfectly within the law, but they are methods of the same general nature as those which my predecessor set out to stop in the Finance Bill last year. I would remind the Committee that he then said:
I would wish to make it quite clear that I do not consider that, in The future, people will be entitled, if they find new methods of avoiding taxation of a similar character to these which are dealt with in this Bill, to say that they are protected by anything I do now from retrospective legislation. I give them fair warning, and after that warning I think they will have no reason to complain if retrospective legislation should be found necessary in this particular class of case."—[OFFICIAL REPORT, 1st July, 1936; cols. 442–3, Vol. 314.]
We have thought it right that these provisions should be retrospective, and Subsection (5) provides that the provisions of the Clause shall have effect for the purpose of assessment for the year 1935–36 and subsequent years. I would point out that this is a very special case. Parliament set out last year to prevent artificial arrangements which would evade the intentions of the law. Three methods have been evolved which do give opportunities for evasion, and we propose not only to stop them from having effect in the future but to treat them as not having had that effect from last year. Ample notice was given by the Chancellor.

The Deputy-Chairman: The speech of the right hon. Gentleman would have been more appropriate to the Question of the Clause standing part of the Bill. After that speech I think we had better have a discussion of the Clause on this Amendment, but on the understanding that it is not repeated on the Question of the Clause standing part.

Mr. A. Somerville: Will the Amendment standing in the name of the hon. Member


for Cambridge University (Sir. J. Withers) be called?

The Deputy-Chairman: No, not after the Chancellor's statement, but any question on it can be raised now.

Mr. Pethick-Lawrence: I would ask the Chancellor to explain the proviso under Sub-section (5). The Sub-section provides for retrospective action, but the second paragraph of it appears to make an exception, and I do not quite see why it is there.

11.33 p.m.

Mr. Somerville: On the general question I should like to point out that Parliament has always objected to retrospective legislation. Last year my hon. Friend the Member for Cambridge University (Sir J. Withers) did raise the point and got some small concessions from the Chancellor. If legislation is retrospective it becomes very hard on the individual or the company. They do not know their position. It is a very dangerous weapon. For instance, the revenue officers may bring a case against a man in court and he may win, and then retrospective legislation may undo the result. Retrospective legislation might also increase the tax upon co-operative societies, on the ground that they have not been sufficiently taxed in the past. I submit that although this provision has been modified to some extent, retrospective legislation is a dangerous thing and not in accordance with the practice of the House.

11.35 p.m.

Colonel Nathan: Notwithstanding what was said, by my hon. Friend the Member for North Aberdeen (Mr. Garro Jones) from these benches, I feel that all legislation for retrospective taxation must be looked at with the utmost care, otherwise real injustice may be done, and injustice which the Legislature never intended. Let us take this Clause and the explanations given by the Chancellor of the Exchequer. I refrained from putting down any Amendment to this Clause, and decided to await elucidation from the Chancellor of the Exchequer. The Clause relates to companies, but the right hon. Gentleman did not draw attention to Sub-section (4) which extends the definition of "company" so as to include industrial and provident and co-operative societies and friendly societies, which are thus put on the same footing as investment

companies and other companies organised under the Companies Acts. In the Finance Act, 1936, Section 18 dealt with the question of tax avoidance and, in a proviso, provided that it was open to the person whom it sought to charge with the tax to go before the Special Commissioners and prove that the motives which actuated him in the transaction to which he was a party was not those of tax avoidance. The Chancellor of the Exchequer has drawn attention to-day to the warning—so described—given by the later Chancellor of the Exchequer on the subject of tax avoidance and retrospective legislation as regards taxation, but the Chancellor made it clear to-day that the warning related to transactions undertaken after the warning was given.
There has come under my observation a series of transactions relating to industrial and provident societies which conducted their business through a certain organisation, with no idea of tax avoidance, because they did not come under the Finance Act, 1922, at all. For a period of years it had been a matter of convenient machinery adopted by the societies in question. These societies have all been wound up, and a liquidator has distributed their assets, which other people have bought. It happens that these societies were finally liquidated a few clays after the beginning of the financial year 1935. I put it to the Chancellor that in such a case the question, "taxation or no taxation" was not an element taken into account. A great injustice would be inflicted by the imposition of retrospective legislation.

Mr. Garro Jones: I should like to find a basis of agreement with my hon. Friend who has just spoken. Is it not possible for accountants, in investigating the accounts for the purchase or transfer of a business, to satisfy themselves, as they do on other points, that there has been no tax avoidance which would lessen the value of the transaction?

Colonel Nathan: I do not follow the interjection. The question of taxation or no taxation is not one for accountants, but depends upon an Act of Parliament. The question whether there was any liability or not for taxation was dealt with in the proviso which the Government advisedly inserted in analogous circumstances in Section 18 of the Finance Act,


1936, for the express purpose of meeting such a case as I have related, and to enable the taxpayer or the person sought to be charged with tax, to go to the Special Commissioners to prove that the motives of tax avoidance did not enter into this series of transactions. Therefore I would ask the Chancellor of the Exchequer to consider the advisability and desirability of inserting some such proviso in the Bill on Report.

11.40 p.m.

Sir Alfred Belt: In the Debate on this and the preceding Clause so much has been said on the question of retrospective legislation that I hope I may be allowed to offer two or three brief observations on the subject. The proposal to introduce in this Clause a comparatively innocuous innovation has led certain members of the Opposition to open their minds to the Committee as to how they would like to see that innovation extended if, I assume, they were in office. The hon. Member for Jarrow (Miss Wilkinson) said that whereas certain persons were successfully evading payment of taxation in her constituency, poor people were being brought before the law for matters of 3s. or 4s. Every Member who represents a poor constituency, as I do myself, feels great sympathy for those who have to pay these sums, which it may be very hard for them to pay, but I think it should be pointed out that the reason why they are before the law is that they are actually breaking the law as it stands, whereas—

The Deputy-Chairman: I really cannot see what this has to do with the Clause.

Sir A. Beit: I was only contrasting the argument of the hon. Member for Jarrow with the allegations made against persons who are said to be breaking the law by evading taxation when they are not breaking any law, and the law is now being amended to deal with the action they have taken in the past. If this principle of retrospective legislation is further adopted, I can imagine some Government in the future, less benevolent than the present one, introducing an Act, say, to increase the Income Tax by is. in the over the previous four or five years, and that is with that in mind that I rise to make a protest against the innovation of retrospective legislation.

11.43 p.m.

Mr. Ede: I listened with great interest to what the Chancellor said, and noticed that in speaking on this Clause he used a word that he used on the previous Clause; he described the transactions which he now proposes to make illegal as having been legitimate in the past. Perhaps, on some strict dictionary meaning of the word, they may have been legitimate, but I should have preferred to say they had been legal in the past. The word "legitimate" would place them in a category that is almost honourable, and I do nod` think that even the right hon. Gentleman, special pleader as he can be on occasion, would care to have to get up and say that the transactions he has been describing have ever been in the category of being honourable. Unlike the hon. Member who has just spoken and my hon. and gallant Friend the Member for Central Wandsworth (Colonel Nathan), I welcome this indication that the Government intend to implement the promise, or the threat—according to the point of view from which it is regarded—that was made by the present Prime Minister last year in his Budget speech. It is a very good thing that it should be understood thaf these dishonourable practices, which may have been legal in the past, but which were designed by people to enable them to avoid what were undoubtedly their just dues to the nation, are to be brought to an end.
If the right hon. Gentleman finds that even this wonderful watertight Clause has leaks in it by the time he comes to us next year, if we have the misfortune to be faced by him next year, he will have our support in endeavouring to stop those leaks and getting some of the water hack that may have been spilt in the meantime. I can only express my surprise that the hon. Member for Cambridge University (Sir J. Withers) and the hon. Member for Windsor (Mr. A. Somerville) should have seen fit to put their names to an Amendment designed to prevent the retrospective application of the Clause. I should have thought they might be more profitably employed than in standing up for this the worst of all lost causes.

11.46 p.m.

Mr. Gallacher: I cannot understand how it is possible for anyone associated with the great movement which represents the masses of the people to take a


stand against such a proposal as a retrospective tax of this kind. We have continually had to face the fact that taxation was being evaded. Last year there was quite a difference of opinion as to whether it was evasion or avoidance, but the fact of the matter has always been that great patriots will not be taxed if they can find a method of dodging it. What prompted me to rise was not the support for the dodgers which has come from this side, but the right hon. Gentleman's reference to the hon. Member for Jarrow (Miss Wilkinson). He said, in connection with her statement in relation to the unemployed and the tax dodgers, that their dodging was quite legitimate. It is always legitimate when they dodge, but it never is when the workers dodge. Let the Government make a comprehensive Clause so that if these people in any way evade payment of taxation they will be liable to a month, or six or 12 months in gaol. We are told that it is the fellows on the Stock Exchange who have helped to prepare this, but they would not face up to the regulations that the Unemployment Assistance Board makes. If you get the sheriffs on the job they will stop tax-dodging, by applying to the men with big incomes exactly the same kind of treatment as is applied to people in such areas as Jarrow. I object to the right hon. Gentleman getting away from his responsibility and the argument of the hon. Member in such a way as that. We on this side cannot support the artful dodgers, but I wish that the Government had dealt with them in a clear and comprehensive Clause which would have stopped all forms of tax evasion by these people.

11.52 p.m.

Lieut.-Colonel Colville: I do not propose to follow the hon. Member for West Fife (Mr. Gallacher) because if he will forgive me for saying so, it is obvious that he has not listened to the Debate. He is under a complete misapprehension as to what my right hon. Friend said. The right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) asked the purpose of the proviso to Sub-section (5). It is this: If a company had made up accounts before 21st April, 1937, that in itself is proof that there was no intention to defraud by the device of delaying making up accounts. The reason the clause is made retrospective is because of the forth-

right warning given by the then Chancellor of the Exchequer and quoted by my right hon. Friend the Chancellor of the. Exchequer to-night that, if those concerned deliberately evaded the provision then made, the further legislation which would be necessary would be retrospective. I agree with those hon. Members who have urged that retrospective legislation should not be indulged in without very good reason, but in this case there is no justification for the complaint. With regard to the appeal made by the hon. and gallant Member for Wandsworth I can assure him that the type of companies he mentioned need have no fear of the kind he suggested. The clause is designed to catch the deliberate tax evader only.

Colonel Nathan: May I say, in view of what has been said, that I was not supporting those who indulged in tax evasion, but asking for a safeguard which was supported and voted for on these benches last year?

Amendment negatived.

11.55 p.m.

Lieut.-Colonel Colville: I beg to move, in page 11, line 23, after "which," to insert "before the twenty-first day of April, nineteen hundred and thirty-seven."
This is little more than a drafting Amendment. The Committee will remember that Sub-section (2) of this Clause is intended to enable the Special Commissioners to meet the case where a "one-man" investment company has not made up accounts and where, heretofore, they have not been able to take action. So far as the year 1935–36 is concerned, it was thought reasonable to limit the effect of the Sub-section to cases where no account had been made up; where such an account had been made up for a period ending in that year, the Commissioners would already have had their opportunity of taking action. But, as the proviso is at present drafted, its effect is not confined to cases where an account has already been made up in normal course. Its wording would leave it open to a company to prepare now an account to some date ending in 1935–36; and in doing this they could easily choose some period for such an account during which practically no income has been received. The company would then come within the proviso and the Commis-


sioners could take no action under Subsection (2) in respect of the rest of its income, which might be very large, for the remainder of the year. We think that it is, therefore, desirable to insert these words and make it perfectly sure that a company could not now prepare an account which would defeat the intention of this proviso.

Amendment agreed to.

Further Amendment made: In page 11, line 24, to leave out "that year," and insert "the year 1935–36."—[Lieut.Colonel Colville.]

Clause, as amended, ordered to stand part of the Bill.

Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[Captain Margesson.]

Committee report Progress; to sit again To-morrow.

The remaining Orders were read, and postponed.

It being after Half-past Eleven of the Clock, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at Two Minutes before Twelve o'Clock.